Alibaba Develops Deposit Token to Navigate China's Stablecoin Crackdown

Summary:
Alibaba is creating a deposit-token payment system to enhance global commerce while aligning with China's stringent regulations on stablecoins. This initiative, led by the company's cross-border e-commerce division, aims to modernize international payments and leverage artificial intelligence for improved efficiency.

Key Takeaways

Alibaba is launching a deposit-token payment system aimed at facilitating global commerce.
The company plans to utilize tokenized euros and U.S. dollars for international B2B payments.
These deposit tokens are regulated and tied to customer deposits, differing from private stablecoins.
Alibaba anticipates reduced settlement times and intermediary fees, streamlining cross-border transactions.
The initiative comes after Chinese regulators imposed restrictions on private stablecoin issuance.

Alibaba Develops Deposit Token to Sidestep China's Fierce Stablecoin Crackdown: Report

Alibaba's Strategic Move Amid Regulatory Pressures

Alibaba is working on a payment system based on deposit tokens, intending to simplify global commerce while navigating the increasingly stringent regulations imposed by Beijing on stablecoins. Recent reports indicate that this move follows a broader trend among Chinese companies striving to enhance cross-border payment processes without provoking regulatory issues as control over digital currencies tightens.

This initiative is being spearheaded by Alibaba’s rapidly expanding cross-border e-commerce segment, which recently unveiled an AI-driven subscription service designed to increase revenue streams.

Transitioning from Stablecoins to Tokenized Bank Deposits

Kuo Zhang, president of Alibaba.com, shared with CNBC that the company is gearing up to utilize tokenized versions of popular currencies such as the euro and U.S. dollar to make international B2B payments more effective. Known as “deposit tokens,” these are issued by regulated banks and supported directly by customer deposits, differentiating them from the privately issued stablecoins that Beijing has repeatedly cautioned against.

Zhang emphasized that the implementation of tokenized payments is expected to decrease settlement times, lower intermediary fees, and enable funds to be transferred “simultaneously” across various markets, including the U.S., Europe, Hong Kong, Singapore, and mainland China.

Alibaba.com also plans to collaborate with global banking institutions, including JPMorgan, which recently launched its own tokenization initiative, JPMD, for institutional clients.

However, the timing of this shift has attracted attention. Companies like JD.com and Alibaba-affiliated Ant Group had sought to introduce yuan-based stablecoins in Hong Kong earlier this year, aiming to challenge the dominance of U.S. dollar stablecoins, which dominate over 90% of the $304.9 billion market.

By October, both firms had to halt their plans as the People’s Bank of China (PBoC) and other regulators advised major tech firms against issuing or supporting stablecoins, even within Hong Kong’s newly regulated framework. Officials expressed concerns that privately issued fiat-backed tokens could undermine the government’s control over monetary policy.

The regulatory environment has since become even stricter, with warnings against publishing stablecoin research or hosting related seminars due to fraud and financial security risks. PBoC governor Pan Gongsheng has labeled stablecoins as a significant concern for global financial stability and reaffirmed China’s firm stance against private digital currencies, despite the ongoing development of the digital yuan.

Merging AI and Tokenization in Alibaba’s Global B2B Strategy

In this climate, Alibaba’s pivot toward tokenized bank deposits represents a strategic maneuver, allowing the company to adopt blockchain-based payment solutions while sidestepping the political complexities linked to stablecoins. Tokenized deposits provide a way to process payments through distributed systems but remain securely grounded in the banking system, supported by actual fiat currency.

Zhang announced that Alibaba.com plans to introduce an AI-powered tool called “agentic pay” in December, which will automatically formulate commercial contracts between buyers and suppliers by analyzing their messaging history. This feature is part of Alibaba's larger agenda to modernize its B2B ecosystem through artificial intelligence.

Additionally, Alibaba's new “AI Mode” search product will enable businesses to compare suppliers based on pricing, logistics, and production capacity. The company has indicated a subscription fee of approximately $20 per month or $99 annually for this service, aiming to establish a new revenue stream.

This renewed focus on technology aligns with the growing prominence of Chinese AI models on the global stage. Recently, Alibaba’s Qwen 3 Max achieved a 108% gain in a live crypto trading contest, outperforming several Western AI models. Only another Chinese model, DeepSeek, delivered superior returns, while OpenAI’s GPT-5 and Google’s Gemini 2.5 Pro experienced substantial losses.