Alibaba has ordered employees to stop using Anthropic’s AI-powered programming assistant, Claude Code, marking the latest escalation in the technological rivalry between the United States and China as artificial intelligence companies tighten access to advanced models amid growing national security concerns.

The Chinese technology giant will prohibit the use of Claude Code across its workforce from July 10 after classifying the software as a high-risk application, according to multiple media reports. Employees have instead been instructed to migrate to Qoder, Alibaba’s internally developed AI coding assistant, reinforcing the company’s broader strategy of reducing reliance on foreign AI technologies.

The move comes as Anthropic intensifies efforts to prevent unauthorized access to its frontier AI models from China, where U.S. export restrictions and company policies have increasingly limited the availability of advanced American AI systems.

Anthropic already bars companies based in China, as well as overseas entities owned or controlled by Chinese firms, from accessing its Claude family of AI models. The restrictions form part of broader efforts by leading U.S. AI developers to comply with American export controls aimed at limiting China’s access to cutting-edge artificial intelligence capabilities.

The latest measures suggest the company has also been closing technical loopholes that previously enabled some Chinese users to access Claude Code through unofficial channels or third-party resellers.

The issue gained public attention after a Reddit user claimed that an earlier version of Claude Code contained functionality capable of quietly identifying users located in China. The post sparked debate among developers over how AI companies are enforcing geographic restrictions.

Anthropic executive Thariq Shihipar later acknowledged the existence of the feature, describing it as part of an internal security initiative rather than user surveillance.

“This was an experiment we launched in March that was meant to prevent account abuse from unauthorized resellers and protect against distillation,” Shihipar wrote on X.

Distillation refers to the process of training a smaller AI model using the outputs generated by a more advanced model. The technique has become a major concern for leading AI developers, who argue it enables rivals to replicate sophisticated capabilities without bearing the enormous costs of developing frontier models from scratch.

Shihipar added that Anthropic has since developed stronger safeguards against unauthorized access, making the experimental detection mechanism unnecessary.

“The team has landed stronger mitigations since then and we’ve actually been meaning to take this down for a while,” he said.

The growing fragmentation of the global AI ecosystem, which has seen geopolitical tensions increasingly shaping technology choices inside major corporations, is believed to have influenced Alibaba’s decision. Rather than depending on U.S.-developed AI software, Chinese technology companies have accelerated investment in homegrown alternatives as Washington tightens restrictions on advanced semiconductors, AI chips and frontier models.

Alibaba has been investing heavily in its own AI ecosystem, developing foundation models, enterprise AI tools and coding assistants designed to compete directly with products from OpenAI, Anthropic and Google. Directing employees toward Qoder is expected to strengthen internal adoption while reducing exposure to potential disruptions arising from U.S. policy changes.

The latest development also follows mounting concerns from Anthropic over Chinese attempts to extract capabilities from its models. Earlier this year, the company accused Alibaba of carrying out what it described as the largest known AI distillation attack against Anthropic’s systems. In a letter to the U.S. Senate Banking Committee, Anthropic alleged that operators affiliated with Alibaba conducted approximately 28.8 million interactions with its AI models using roughly 25,000 fraudulent accounts over a six-week period.

Anthropic argued that stronger cooperation between industry and government is needed to prevent illicit model distillation and maintain U.S. leadership in artificial intelligence.

Alibaba has not publicly responded to those allegations.

The International Monetary Fund (IMF) has said the rapid rise of tokenization is set to fundamentally reshape the architecture of global financial markets, but warned that blockchain technology will not eliminate the regulated institutions that underpin the financial system.

In a new working paper titled ‘The Evolution of Financial Market Infrastructures in a Tokenized Economy: Exploring Blockchain Implementation Options for Issuance, Central Clearing, Settlement, and Reporting’, the IMF argued that while distributed ledger technology (DLT) and smart contracts can automate a growing number of financial processes, legal entities and regulated market infrastructures will remain indispensable for governance, compliance, risk management and financial stability.

The paper, prepared by IMF researchers Yaiza Cabedo, Tommaso Mancini-Griffoli, Fabian Schär and Nicolas Zhang, describes tokenization as the most significant technological shift in financial market infrastructure since securities moved from paper certificates to electronic records decades ago.

According to the IMF, the technology has the potential to modernize virtually every stage of financial transactions, including the issuance, trading, clearing, settlement, and reporting of financial assets.

“Tokenization has the potential to reshape Financial Market Infrastructures more profoundly than any technological shift since securities dematerialization,” the paper stated.

The report explained that tokenization allows ownership rights over financial assets to be represented digitally on blockchain networks, enabling transactions to be executed through programmable smart contracts rather than multiple manual processes involving intermediaries.

By operating on a shared digital ledger, financial institutions could significantly reduce operational costs associated with reconciliations, record-keeping, collateral management, and settlement.

The IMF said programmable financial infrastructure could streamline delivery-versus-payment settlements, automate collateral movements, improve liquidity management and shorten settlement cycles, potentially moving many markets closer to real-time settlement.

The technology could also improve transparency by creating a single shared source of transaction records that market participants can access simultaneously, reducing operational frictions that currently arise from maintaining separate databases across institutions.

However, the IMF cautioned that technological automation has clear limits.

While smart contracts can execute predefined instructions with speed and precision, they cannot replace the institutional judgment required to manage financial crises, oversee systemic risks or ensure legal accountability.

According to the report, critical functions such as risk governance, margin calibration, default management, dispute resolution, business continuity planning, supervisory intervention, and regulatory compliance will continue to require human oversight and legally recognized institutions.

The IMF believes tokenization will fundamentally change how they operate, rather than replacing financial market infrastructures.  The institution expects the future financial system to evolve toward hybrid models that combine blockchain-based automation with traditional institutional governance.

Under such arrangements, smart contracts would increasingly manage routine operational processes, while regulated institutions would continue supervising compliance, enforcing legal rights, managing financial risks and intervening during periods of market stress.

The report noted that hybrid systems will remain particularly important in jurisdictions where blockchain-based settlements lack full legal recognition or where ownership rights still depend on traditional legal frameworks outside distributed ledger systems.

The IMF also pointed to the growing complexity of transactions that span multiple blockchain networks, arguing that interoperability challenges mean regulated institutions will continue to play a central coordinating role.

Beyond operational improvements, the report identified several emerging risks associated with tokenized financial markets. Among them are vulnerabilities in smart contract programming, concentration of governance power within blockchain protocols, dependence on external data providers known as oracles, privacy concerns arising from shared ledgers, and fragmentation across competing blockchain ecosystems.

These risks, the IMF argued, make regulatory oversight even more important as financial markets adopt blockchain technologies at scale.

The report therefore urged policymakers to focus less on whether tokenization should replace existing financial infrastructure and more on determining which functions can safely be automated and which require ongoing institutional oversight. According to the IMF, the central policy question has shifted from whether financial market infrastructures will remain relevant to how existing institutions should evolve alongside blockchain-enabled financial systems.

The findings come as governments, regulators and central banks around the world accelerate efforts to integrate tokenization into mainstream finance.

Financial institutions now see tokenization as a way to improve market efficiency, reduce settlement costs, unlock liquidity and facilitate faster cross-border transactions, particularly in traditionally fragmented capital markets.

Central banks are also studying how tokenized deposits and central bank digital currencies could interact with tokenized securities to enable programmable financial ecosystems.

The report is particularly relevant for emerging markets such as Nigeria, where regulators have recently expanded oversight of digital assets.

Nigeria’s Securities and Exchange Commission (SEC) has tightened supervision of virtual asset service providers through its regulatory incubation programme while simultaneously preparing the market for broader digital asset adoption.

The country’s regulatory framework also took a major step forward following President Bola Ahmed Tinubu’s signing of the Investment and Securities Act (ISA) 2025.

The legislation, which repealed the Investments and Securities Act of 2007, modernizes Nigeria’s capital market laws and, for the first time, explicitly recognizes digital assets as securities where they function as investment instruments.

The classification places tokenized financial products, including tokenized equities and investment-linked digital assets, squarely within the SEC’s regulatory jurisdiction.

The IMF’s conclusions reinforce the direction many regulators are taking by recognizing that while blockchain technology can automate financial processes, legal certainty and institutional accountability remain essential for investor protection and market stability.

Financial market infrastructures—including payment systems, securities depositories, central counterparties, clearing houses, settlement systems and trade repositories—are therefore expected to evolve rather than disappear as tokenization gains wider adoption.

For financial institutions, the report signals that future competitiveness will depend not simply on adopting blockchain technology but on successfully integrating programmable infrastructure with robust governance and regulatory compliance.