A new stablecoin to launch on TRON
The TRON blockchain is ready to welcome another resident. The new TCNH stablecoin will soon be available to network users, in addition to the standard Tronix (TRX) and Tron Power (TP).
A new Tron-based stablecoin, TCNH, has been launched by the TrueUSD development team, which also introduced TUSD (a token pegged to the US dollar on the Ethereum blockchain).
It is already known that TCNH is a stablecoin pegged to the offshore Chinese yuan (CNH).
What is an offshore yuan, and why is it needed?
Unlike the fiat yuan (CNY), which is only used within China, the offshore yuan (CNH) circulates outside the country, primarily in Hong Kong, a Chinese special administrative region with the rights of a free economic zone.
The autonomy of Hong Kong was recognized in 1997. China agreed not to create its own economic or tax laws for exactly 50 years and to only have control over the former British colony's foreign and defense policies.
Since Hong Kong has grown into a significant hub of global trade, an offshore national currency solves the problem of making payments in yuan outside of China without violating the law.
CNH is the currency of mutual settlements with foreign counterparties and is formally traded at a 1:1 exchange rate with CNY. In fact, the exchange rates for onshore and offshore yuan differ. This is due to the constant slight devaluation of CNH.
The Central Bank of China constantly fights this mismatch in pricing by periodically buying offshore yuan.
What is TCNH, and how much will it cost?
The launch of the Chinese CBDC logically raised the question of the need for a digital version of the offshore yuan. Only citizens of the country are permitted to purchase and pay in digital yuan (e-CNY). Special apps on WeChat have been created for this purpose, but they require authorization with proof of citizenship.
What about foreign technology companies that do business in China and Hong Kong and use offshore yuan?
The TCNH stablecoin, which is pegged to CNH, has been launched for this type of business. We can almost certainly predict that the Chinese government will strive to keep the token at a 1:1 ratio and back it by the CNH reserve. After all, the brand-new stablecoin will serve as a digital replacement for the offshore yuan and be extensively utilized for blockchain settlements between Chinese and foreign businesses.
TrueUSD Director of Marketing and Business Development, Anabel Gan, said:
We’ve seen that financial markets like Hong Kong are moving towards becoming a global hub for digital currencies… 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.
The ideologist and mastermind of this project was Justin Sun. Even though Sun stepped down from his position as CEO of the TRON Foundation a year ago, he is still working to boost the platform's strategic potential.
There is no doubt that businesses like Alibaba, Baidu, Huawei, and WeChat Pay will be interested in the new stablecoin. But it’s not worth considering as a financial instrument for regular traders. In this case, TCNH payments are most likely to be made at the institutional level.
