Author: Yang Tao, Deputy Director of the National Financial and Development Laboratory
Source: National Financial and Development Laboratory
The development model of RMB stablecoins can be 'combined internally and externally'.
Recently, the central bank governor Pan Gongsheng stated at the 2025 Lujiazui Forum that new technologies such as blockchain and distributed ledgers are promoting the vigorous development of central bank digital currencies and stablecoins, while also posing great challenges to financial regulation. In fact, with the (stablecoin regulations) in Hong Kong set to take effect on August 1, recent discussions about stablecoins have also reached unprecedented levels of interest.
Generally, offshore RMB business refers to financial business conducted in offshore markets settled in RMB, which, driven by policy, presents a pattern centered on Hong Kong with multi-point developments in Singapore, London, and other areas. Domestic offshore RMB business reflects dual characteristics of 'onshore' and 'offshore', operating with account management as the core mechanism, forming capital free flow under specific conditions. Correspondingly, many viewpoints suggest that offshore RMB stablecoins should be piloted in the Hong Kong market, and once conditions mature, explore in the domestic offshore market represented by the Pilot Free Trade Zone.
We believe that stablecoins built on the Web 3.0 world have transcended traditional offshore and onshore categories. To better achieve strategic coordination, proactive regulation, and collaborative promotion, a linked development model of domestic offshore and overseas RMB stablecoins should be considered. The reasons are as follows: first, facing the rapid development of dollar-collateralized stablecoins and the rapid evolution of stablecoin regulation in various countries and regions, China urgently needs to actively conduct research and regulatory responses to stablecoins from the perspective of financial security and currency sovereignty, systematically consider the reform pilot of RMB stablecoins, rather than passively respond by relying on offshore RMB stablecoins. Second, Hong Kong's offshore RMB market has limited scale, and under the condition that stablecoins must maintain a 1:1 reserve with fiat currency assets, it may be difficult to independently support RMB stablecoins to achieve economies of scale. Third, the regulation of stablecoin issuance and transactions involves many cutting-edge challenges such as identity verification and anti-money laundering, and countries and regions are actively promoting regulatory innovation and seeking coping strategies. In this regard, central relevant departments should play a leading role in the regulation of RMB stablecoins while seeking coordination and cooperation with Hong Kong regulatory authorities.
Since the establishment of the Shanghai Pilot Free Trade Zone on September 29, 2013, a system has been basically established that aligns with international economic and trade rules. At the same time, central financial management departments are fully supporting the construction of Shanghai as an international financial center to reach a higher level, and the central bank has announced eight measures, including launching a pilot reform for offshore trade finance services in the new Lingang area of Shanghai. Therefore, it is worth considering promoting the innovative exploration of RMB stablecoins in synchronization with Hong Kong within the Shanghai Pilot Free Trade Zone.
For domestic offshore RMB stablecoin (CNY Coin, CNYC), one model is for clearing organizations, large commercial banks, leading payment institutions, well-known investment institutions, etc., to jointly establish an RMB stablecoin issuance institution in the Shanghai Free Trade Zone, exploring the establishment of on-chain issuance and operation mechanisms for RMB stablecoins. Furthermore, it aims to form a wholesale market for RMB stablecoins directed at certain authorized institutions (such as digital RMB operating institutions, which have accumulated relatively rich innovation experience), with authorized institutions exchanging RMB stablecoins for qualified enterprises or individuals, thereby constructing a retail market for RMB stablecoins.
Model two relies on certain digital RMB operating institutions' branches in the Shanghai Free Trade Zone to directly mint and operate RMB stablecoins on-chain, while fully fulfilling compliance responsibilities when redeeming to specific qualified economic entities. Of course, if a bank is the issuer of the stablecoin, on one hand, the tokenized deposits explored by overseas banks or related organizations, although having similar characteristics to stablecoins, still differ from true stablecoin mechanisms. On the other hand, some overseas banks, in response to disintermediation challenges, have begun to study or attempt to establish technology subsidiaries or jointly set up related legal entities to explore issuing fiat stablecoins to increase ecological attractiveness to customers and resist the impact of the crypto industry. Therefore, the exploration of RMB stablecoins under this model still needs to clarify specific paths and focuses.
It must be noted that regardless of the model, several requirements must be simultaneously met. First, RMB stablecoins must have sufficient asset reserves. In addition to highly liquid assets such as RMB cash and short-term government bonds, a certain proportion of digital RMB reserves can be set up to achieve synergy with the central bank's CBDC pilot reform. Second, the RMB stablecoin issuer is required to establish a sound compliance operation mechanism for risk identification, asset segregation and custody, and internal control, fulfilling relevant compliance obligations to direct customers, and also strive to cooperate with all parties to expand the application scenarios of RMB stablecoins, effectively cooperating with the key reforms of the Pilot Free Trade Zone. Third, fully leveraging the 'electronic fence' characteristics of the FT accounts in the Shanghai Free Trade Zone, through innovative design of technical standards and smart contracts, to ensure that entities holding and using RMB stablecoins during the pilot period are limited to specific qualified institutions, enterprises, or individuals as much as possible.
Meanwhile, regarding offshore RMB stablecoins (CNH Coin, CNHC), under Model One, it is possible to promote the establishment of an RMB stablecoin issuance institution jointly initiated by domestic and foreign institutions in Hong Kong, or under Model Two, allow certain authorized domestic banks or payment institutions to rely on their registered legal entities in Hong Kong to mint and issue offshore RMB stablecoins, which must comply with the relevant laws and regulations of the Hong Kong region. This could form a dual RMB stablecoin system for domestic and foreign entities, while drawing on existing cross-border payment and capital flow institutional arrangements between the mainland and Hong Kong to explore the exchange and interconnection mechanisms of CNYC and CNHC. Among them, CNYC will primarily be used in the short term to supplement and enhance the efficiency of payment settlement for cross-border trade and business activities, while CNHC aims to further strengthen Hong Kong's position in the internationalization of RMB and can be used in compliance for on-chain financial activities and transactions and settlements of bulk commodities, especially actively exploring support for Real-World Assets (RWA) based on RMB assets, thus jointly committed to enhancing the global influence of RMB and RMB assets.
It should be noted that domestic and foreign regulatory authorities and RMB stablecoin issuers should work closely together to continuously promote intelligent technological innovation, effectively identify RMB stablecoin secondary market activities in the blockchain ecosystem, especially monitoring the situation where non-qualified domestic entities hold RMB stablecoins, to prevent illegal capital flows and prevent them from being used for illegal activities.
Of course, as the Bank for International Settlements (BIS) has pointed out, stablecoins still have defects in three key standards: singleness, elasticity, and integrity. The reform exploration of RMB stablecoins still needs to strictly control risks, proceed steadily, and maintain moderate scale, while also promoting the formulation of relevant laws and regulations as soon as possible, thereby strengthening China's voice in the global legal game concerning stablecoins. Looking to the future, we can also draw on the 'Financial Internet' (Finternet) proposed by BIS, which relies on the establishment of a unified ledger, to promote the coordinated development and complementary win-win of digital RMB, bank tokenized deposits, and stablecoins.