Chinese Yuan Stablecoin Launches on Tron: Why Is This Crucial?
Tron (TRX), a high-performance EVM-compatible blockchain, becomes the technical platform for the latest stablecoin project pegged to Offshore Chinese Yuan (also Offshore Renminbi, Offshore RMB or CNH). TrueUSD, an issuer of a new stablecoin, is the second fintech heavyweight to release a stablecoin project pegged to the Chinese currency. Is this a stablecoin trend to watch in 2023?
Offshore Chinese Yuan stablecoin TCNH launches on Tron (TRX)
According to the official statement by TrueUSD, the stablecoin team behind the multi-blockchain overcollateralized U.S. Dollar-pegged stablecoin TUSD, its new project goes live on Tron (TRX) blockchain. TCNH stablecoin is pegged to the Offshore Chinese Yuan (CNH), an offshore "version" of the Chinese Yuan (renminbi), a top global reserve currency.
🚀#TCNH IS NOW LIVE！
— TrueUSD (@tusdio) December 15, 2022
🪙#TCNH is a #stablecoin pegged to Offshore Chinese Yuan, officially launched on #TRON by TrueUSD. @trondao
💪TRON is one of the fastest growing public blockchains.
Contract address: TBqsNXUtqaLptVK8AYvdPPctpqd8oBYWUC
For more👉https://t.co/hO4BioBokI pic.twitter.com/AL8iXZ2rwE
As per the data shared in public blockchain explorers, the token was minted today, on Dec. 15, 2022, at about 7:00 a.m. (UTC). The team claims that the new project is 100% safe and transparent as all of its assets are backed by fiat Offshore Chinese Yuans. Its contracts have already been audited by a top cybersecurity company.
Its stability is also guaranteed by a TrueUSD vault that adheres to "the optimal allocation of diversified assets in the world" in order to protect the peg of assets it maintains.
Annabel Gan, TrueUSD's director of marketing and business development, stresses the crucial importance of this release for the progress of her team and its toolkit of stablecoin offerings:
We've seen that financial markets like Hong Kong are moving towards becoming a global hub for digital currencies so our products are constantly evolving. We believe that TCNH will further cement our leading position in digital currency infrastructure and contribute to our effort of building a trustworthy and decentralized global payment network.
Justin Sun, founder of Tron (TRX) blockchain and CEO of BitTorrent, appreciated the latest addition to the range of assets supported by his platform.
¥＞$. Few understand.
— H.E. Justin Sun🌞🇬🇩🇩🇲🔥 (@justinsuntron) December 15, 2022
By press time, TCNH creators described it as a "sister product" to TUSD, a flagship TrueUSD offering and the seventh largest stablecoin by market capitalization with a circulating supply over $752 million in equivalent.
What's the difference between CNY and CNH?
Offshore Chinese Yuan, or CNH ("H" means Hong Kong in this case) is an alternative to the "regular" Chinese Yuan designed for trading and operations in markets outside of mainland China. Due to the specifics of the Chinese economic system, CNY ("Onshore Yuan") is also controlled by the government of China: unlike the majority of currencies, its rate is not formed by demand/supply laws.
Foreign businesses can use CNH while working in Mainland China, but to use their capital offshore, they need to convert it to Offshore Renminbi (CNH). Unlike the "original" Yuan, CNH sees its price controlled by the trends of free markets. Mainly, it is traded on offshore markets like Hong Kong and Singapore.
As such, the prices of CNY and CNH might be different. However, using CNH for remittances allows entrepreneurs, traders and investors to circumvent the draconian monetary regulations of Mainland China. That is why two "versions" of the Chinese Yuan, basically, address different use cases.
Yuri MolchanAs covered by U.Today previously, China is leading the global experiment with central bank digital currencies, or CBDCs. Its e-CNY is based on "Onshore Renminbi." In 2021-2022, it was released to Chinese citizens for a series of trials. Also, it was accepted by merchants during the 2022 Beijing Olympics.
More Yuan-based stablecoins to come?
By the end of 2022, the Chinese Yuan remains the fifth largest fiat currency in the world by capitalization. That makes CNY an inevitable element in global cross-border remittances and trading ecosystems. CNH is also of paramount importance, for the Asia Pacific region at least. That is why Yuan-pegged stablecoins' prospects are in focus for traders and crypto users in various countries.
However, this segment is still in its infancy. According to world-leading independent cryptocurrencies tracker CoinGecko, only two CNY-based stablecoins have been launched so far. The first one, bitCNY, has been defunct for years, while CNH Tether (CNHT), an Ethereum-based version of CNY-pegged stablecoin by Tether Limited, is almost inactive, with $2.9 million in market cap and $3,000 in 24-hour trading volume.
That is why, a week ago, Tether Limited decided to launch its own stablecoin pegged to CNH. Offshore Chinese Yuan Tether (CNH₮) went live on Tron (TRX) on Dec. 6, 2022.
Tether CTO Paolo Ardoino highlighted that this launch is a major milestone for Tether's ecosystem amid a bearish recession:
We're excited to bring CNH₮ to the Tron ecosystem. At a time when the crypto market is experiencing immense turmoil, we believe that the best way forward is to keep building. Things are business as usual at Tether and we hope our continued growth and expansion will inspire others to keep going as well.
It is worth noting that Tether also launched an EUR-pegged stablecoin in Q4, 2022.
Alex Dovbnya
Dan Burgin