KuCoin Ventures, the venture arm of China-focused (but Seychelles-registered) crypto exchange KuCoin, led a $10 million funding round into the stablecoin issuer behind CNHC, a stablecoin pegged to the value of the offshore yuan.

CNHC is pegged 1:1 with the offshore yuan, known by its abbreviation CNH to differentiate it from China’s onshore yuan, which goes by CNY. Reserves for the CNH are kept at a Hong Kong depository institution.

“This investment in CNHC is part of KuCoin Ventures' broader strategy of investing in the Web3 infrastructure in the APAC region,” Justin Chou, chief investment officer of KuCoin and lead at KuCoin Ventures, said in a statement. “Hong Kong has a well-established traditional finance ecosystem. With the regulation and new policy for next-generation digital assets, Hong Kong has a real opportunity at becoming the new crypto center of the world.”

CNHC is issued on both Ethereum and Conflux. On-chain data shows thatEthereum has 23 holders of the tokenand 102 transfers, whileConflux has 606 holders and 1,487 transfers.

Fan Long, co-founder of Conflux, says that Conflux is capturing the majority of the volume here because of Conflux’s “regulatory compliance” in China.

“The significance of CNHC stems from its capacity to connect traditional financial systems with the emerging Web3 landscape, especially amid heightened regulatory scrutiny in the U.S.,” he told CoinDesk in a note. “CNHC presents a practical alternative for businesses and users in search of compliant options beyond the US-centric regulatory framework.”

Stablecoins are overwhelmingly backed by the U.S. dollar. While there are stablecoins based on other world currencies such as the Euro, Pound, or other dollars like the Australian, Canadian, or Singaporean variety, none come close to touching the volume of USD-backed stablecoins like USDT or USDC.

On one hand, this has only reenforced U.S. dollar hegemony. The next frontier of finance being denominated in dollars is largely a good thing as it extends U.S. rule making into the ether,CoinDesk columnists have argued.

But at the same time, not everyone wants to follow U.S. rules, especially when they have no nexus to the country.Regulators in the U.S. are also hesitantto allow crypto full-fettered access to the American banking system untilstringent federal oversight is established.

The market itself is not a fan of the U.S.-centric concentration risk this presents. USDC,knocked off its peg for multiple daysduring the crypto banking crisis, only recently regained it butthe smart money is skeptical.

BitMEX co-founder Arthur Hayes thinks the answer to all of this is a bitcoin-derivatives-based algorithmic stablecoin called the NakaDollar, though the market might be skeptical of the concept after the collapse of Terra last year.

There’s certainly been a successful use case for theCNH in China’s offshore bond market, which is what it was built for. But crypto is something else entirely.

It’s not without its skeptics.

Alex Liu, CEO of Taipei-based Maicoin, said in a recent interview with CoinDesk that the RMB is too tightly controlled on or offshore for it to work out.

“I think the only real challenge for the U.S. dollar is the RMB. But not through crypto, and not through China’s CBDC,” he said, arguing that the real focus is oil traded in RMB-denominated contracts. “Most trade between Russia and China has been de-dollarized.”