Alibaba-backed firm eyes partnership with Circle’s USDC

Ant Group, backed by Alibaba Group's co-founder Jack Ma, is in negotiations with Circle Internet Group to integrate the USDC stablecoin into its blockchain platform. This is a crucial first step in integrating regulated digital assets into China's financial technology ecosystem.

According to sources familiar with the partnership, Ant Group, an affiliate company of Alibaba Group, plans to incorporate USDC once it is compliant in the U.S. The timeline has yet to be determined, and both firms declined to comment.

This comes at a time of increasing global acceptance for stablecoins, particularly following the U.S. Senate's passage of legislation in June to create regulations for dollar-pegged digital assets. 

Circle, which went public on June 5, is well-positioned to capitalize on this momentum. The company announced in April that it is in the process of launching a payments network to facilitate cross-border transactions using its USDC token.

With a market cap of $62 billion, USDC is the second-largest stablecoin, accounting for nearly 25% of the total stablecoin market cap of $255.8 billion.

For Ant International, the integration of USDC is part of a broader effort to incorporate regulated digital currencies, including central bank digital currencies (CBDCs) and tokenized deposits, into its operations. 

The firm, which handled over $1 trillion in global transactions last year, with about one-third of transactions processed via its blockchain, is also actively seeking stablecoin licenses in Hong Kong, Singapore, and Luxembourg.

Through the Circle partnership, Ant can develop its treasury and cross-border payment services, leveraging its existing relationships with global banks such as HSBC, JPMorgan, and Standard Chartered.

According to Bloomberg, Ant International, the company's global unit, generated nearly $3 billion in revenue last year and has achieved consecutive years of adjusted profits. Analysts expect the company to have a potential IPO valuation in Hong Kong of $8-$24 billion, representing strong interest from investors as demand for regulated digital assets grows.

Digital Yuan stablecoin

China has had a total ban on cryptocurrencies in the mainland, which includes trading, mining, exchanges, and financial services, since 2013. The ban also includes most private stablecoins.

However, according to Reuters, JD.com and Ant Group have asked the Chinese central bank to allow yuan-based stablecoins, as the country seeks to counter the growth of digital currencies tied to the U.S. dollar.