Beijing faces mounting calls to reconsider its approach to stablecoins, especially as the U.S. accelerates its digital finance agenda, reinforcing the dollar’s dominance through crypto regulation.

Despite China’s ongoing crackdown on cryptocurrencies, voices are growing louder even within its top institutions urging the development of yuan-backed stablecoins. People's Bank of China (PBOC) Governor Pan Gongsheng acknowledged that stablecoins could dramatically reshape international finance, particularly by offering alternatives to traditional systems vulnerable to sanctions.

Experts say China needs alternative infrastructure

Former PBOC Governor Zhou Xiaochuan warned that dollar-backed stablecoins could promote global dollarization. Meanwhile, other officials suggested developing yuan-based stablecoins to help internationalize the Chinese currency and expand China’s influence over global payment systems.

U.S. Advances, Beijing Hesitates

This renewed interest in stablecoins comes just as the U.S. makes decisive moves. The U.S. Senate recently passed a landmark bill to regulate stablecoins — a major win for the crypto industry and part of President Trump’s digital asset strategy.

U.S. Treasury Secretary Scott Bessent emphasized that stablecoins could strengthen the dollar rather than weaken it, citing greater trust in American regulatory oversight compared to centralized state-issued currencies like e-CNY.

🌍 Stablecoins are projected to surpass $3.7 trillion in value by 2030, with most backed by U.S. dollars and short-term government bonds. Meanwhile, China remains on the sidelines.

Hong Kong: A Testing Ground for Yuan-Backed Stablecoins?

Hong Kong may become the “sandbox” for yuan-pegged stablecoins. The city has already implemented a legal framework for fiat-backed stablecoins, and major tech giants like JD.com and Ant Group are reportedly preparing license applications.

According to Morgan Stanley’s chief China economist Robin Xing, stablecoins aren’t new currencies but new distribution channels for existing ones. If China wants to remain competitive, it must embrace this evolving financial architecture.

📊 JD.com, for instance, aims to reduce cross-border transaction costs by 90% and cut settlement times to under 10 seconds using stablecoins. Zhejiang China Commodities City Group, which operates the world’s largest wholesale market, has also announced its intention to enter the space through licensing.

Digital Yuan Faces Hurdles — Can Stablecoins Succeed?

China’s official digital currency (e-CNY) has yet to gain widespread traction. Meanwhile, the cross-border central bank project mBridge faces uncertainty after the Bank for International Settlements (BIS) pulled out due to concerns over sanctions evasion.

Still, PBOC Governor Pan announced the creation of an international e-CNY hub in Shanghai, signaling Beijing’s continued ambitions in digital finance.

🧭 Experts suggest China pursue a dual-track strategy — expand traditional efforts like CIPS and currency swaps while using Hong Kong to pilot yuan-backed stablecoins.

A Critical Crossroads for China

Challenges remain. Today, stablecoins are primarily used for crypto trading rather than real-world commerce. Regulatory uncertainty persists, particularly over whether stablecoins are currencies or financial instruments.

Cornell professor and The Future of Money author Eswar Prasad cautioned that yuan-pegged stablecoins might struggle without major market reforms. “Without unifying the onshore and offshore yuan markets, these stablecoins won’t hold value,” he said.

However, he also believes they could accelerate reforms and push China toward a more market-oriented policy.

🔚 As the U.S. tightens its grip on the race for digital currency leadership, China now stands at a crossroads: will it cautiously observe the future of global finance — or boldly shape it through stablecoin innovation?



#china , #Stablecoins , #CBDC , #DigitalCurrency , #CryptoNews

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