KuCoin invests $10 million in yuan-pegged stablecoin CNHC
KuCoin Ventures, the investment division of cryptocurrency exchange KuCoin, has made a strategic investment in Chinese yuan-pegged stablecoin issuer CNHC.
The $10 million funding aims to foster the stablecoin issuer and blockchain-based payment service provider and strengthening their position in the market. Alongside KuCoin Ventures, the growth investment round was bankrolled by prominent industry investors, including IDG Capital and the investment arm of USDC issuer Circle.
CNHC is a stablecoin that’s fully collateralized and backed by offshore Chinese yuan (CNH) at a ratio of 1:1. Pending approval from the Hong Kong’s regulators, its core applications will be money transfers, cross-border trade settlements, and liquidity management.
Created to satisfy renminbi-biased crypto enthusiasts, CNHC can provide protection during periods of extreme volatility in the market while improving the risk and return metrics of crypto-investment portfolios.
CNHC, whose reserve assets are held in a Hong Kong licensed trust, is issued on Ethereum and Conflux Network. The latter is a strategic partner in the development of CNHC ecosystem.
Founded in early 2021 by Jack Chou and Joy Cham, CNHC Group is a blockchain technology company registered in Singapore and funded by VC investment institutions. The company claims to have processed in 2022 $40-50 million in monthly transactions via the USD-pegged USDT and USDC as well as the CNHC stablecoin.
The development comes nearly three months after the team behind TrueUSD (TUSD) launched its Chinese yuan-backed stablecoin, which it revealed will run on top of the TRON (TRX) blockchain as an TRC-20 token.
With China being the world’s second largest economy, its currency has become of great interest and value for crypto enthusiast. However, its unique monetary system features two versions of the national currency, the onshore yuan (CNY) and offshore renminbi (CNH). The latter came about as China began trying to internationalize its currency.
The main difference between the two is that the renminbi can be traded freely on FX markets, while onshore yuan trading is tightly controlled by the Chinese central bank.
Stablecoins have been a core part of the growth story for crypto and DeFi, with US dollar-pegged stablecoins being the de facto reserve currency of crypto thus far. Also, demand for stablecoins in the e-commerce and payment space has been surging as the fiat-backed tokens allow users and merchants to avoid volatility.
Moreover, online retailers and payment gateways benefited from faster, cheaper transactions as compared to credit cards and traditional payment systems. This trend was driven by growing interest in decentralized finance (DeFi) and OTC desks that use the token to settle block trades over-the-counter.