HONG KONG (Reuters) - A Shanghai regulator said it held a meeting this week for local government officials to consider strategic responses to stablecoins and digital currencies - a marked shift in tone for China, where crypto trading is banned. The Thursday meeting was organised by the Shanghai State-owned Assets Supervision and Administration Commission and follows calls by experts and major companies in China to develop a yuan-pegged stablecoin. We need to have "greater sensitivity to emerging technologies and enhanced research into digital currencies," He Qing, the regulator's director, told the meeting according to a post on the body's official WeChat account. Photos of the meeting showed some 60-70 attendees.

Shanghai is China's main international financial hub and often leads pilot programmes for regulatory change. "Given China's strong fintech ecosystem, it has the potential to be a key player in shaping the future of blockchain-based payments," said Nick Ruck, director at LVRG Research. HURDLES At the Shanghai meeting, a policy expert from Guotai Haitong Securities spoke about the history, types and characteristics of cryptocurrencies and stablecoins, and analysed global regulatory frameworks and strategic approaches, the regulator's post said. U.S.-listed crypto stocks jumped on Friday morning as bitcoin surged to a record high in the run-up to a landmark week that could cement policy wins for the crypto industry.

The expert explained the opportunities and challenges facing stablecoins and offered policy suggestions for digital currency development, the post added. Separately, Yang Tao, the deputy director of the think tank National Institution for Finance and Development, said this week that China should explore the issuance of yuan-based stablecoins in the Shanghai Pilot Free Trade Zone and in Hong Kong simultaneously. Any change in China may not come easily, with the country's capital controls likely to be a key hurdle to the development of stablecoins, market participants have said. The central bank's governor Pan Gongsheng also said last month that the boom in digital currencies and stablecoins poses huge challenges to financial regulation.

Mainland China banned cryptocurrency trading and mining in 2021 due to concerns about the stability of the financial system.