Stablecoin issuer Tether is planning to issue a new stablecoin “CNHT” pegged to offshore Chinese yuan (CNH), according to Zhao Dong, a shareholder of Tether’s sister company Bitfinex.

Zhao revealed Tether’s big move via his WeChat moment on August 21, saying that Tether is going to issue Renminbi-pegged stablecoin CNHT in the near future. He also said that his peer-to-peer crypto lending platform RenrenBit would be the first to support trading and deposits for CNHT when it is launched.

“Personally, I think the offshore yuan stablecoin could boost the circulation of offshore renminbi and internationalize it. Regulators may be happy to see it proceed and succeed.” He added in a later post.

No one would have thought that Bitfinex and Tether would be reaching out to Renminbi-backed stablecoin at a time when the duo is under investigation by the New York Attorney General (NYAG).

The news soon triggers heated discussions in the crypto space in the country. Dovey Wan, founding partner of Primitive Ventures, tweeted that Chinese regulators may be angered by the move.

A few thoughts here please chime in 1. I don’t see enough demand for CNHT and alike, as local Chinese will still trade $USDT with CNY, if it’s CNH it will be the same as USD 2. Not sure what’s the material upside of having CNHT for Tether, plus pissing of Chinese regulator — Dovey Wan 🗝 🦖 (@DoveyWan) August 21, 2019

After 2018, the Chinese government seems to have loosened control on cryptocurrency in general, but CNHT may trigger their nerve again considering the PBoC is about to roll out its central bank digital currency (CBDC).

Apart from concerns for regulatory pressure, claiming it is a suicide mission, many argue that there’s no such demand for a Renminbi-pegged stablecoin from local crypto traders.

Currently the USDT liquidity in China is mainly supported by P2P trading over the counter (trade USDT with CNY), the demand for CNHT would be poor as local Chinese might stick to buying USDT with CNY.

“This is a useless stupid effort. There’s no such demand from local traders, neither demand from overseas. It only enables trade between the Chinese yuan and U.S. dollar in the digital realm, while its issuer is not a Chinese firm.” commented He Wei, founder of crypto exchange LBank.

Du Jun, former confounder of crypto exchange Huobi and founder of Chinese crypto media Jinse, has started a boycott of Tether’s CNHT, saying “it will bring systematic risk to local Chinese crypto traders and companies.”