China’s Shanghai officials are exploring stablecoins, hinting at a possible policy shift despite the ongoing crypto trading ban.
Hong Kong may soon test yuan-backed stablecoins as experts push for faster adoption without risking China’s strict capital controls.
Reports of China quietly hoarding Bitcoin and stablecoin talks have sparked renewed speculation around the country’s crypto strategy.
China may be rethinking its rigid crypto stance after new policy discussions surfaced in Shanghai. The Shanghai State-owned Assets Supervision and Administration Commission (SASAC) recently held a rare meeting focused on stablecoins and digital currencies, as per Reuters.
This action comes after the government was under increasing pressure from IT executives and policy analysts to introduce a stablecoin backed by yuan. The discussion indicates a discernible change in tone, notwithstanding China's stringent prohibition on cryptocurrency trading. Interestingly, the central bank has hinted at new possibilities by acknowledging stablecoins' potential to change international payments.
Additionally, He Qing, the director of SASAC, underlined accelerating research and being vigilant about new technologies, such as stablecoins. This comes after China expressed concern about the United States' use of stablecoins backed by the dollar, such USDC, to increase its financial power.
In response, calls to create a stablecoin tied to the offshore renminbi have intensified. Moreover, PBOC Governor Pan Gongsheng recently stated that stablecoins could transform cross-border payments.
Hong Kong as China’s Stablecoin Sandbox
However, capital controls in mainland China complicate direct crypto integration. Consequently, experts suggest testing yuan-backed stablecoins in Hong Kong. According to PBOC adviser Huang Yiping, Hong Kong’s offshore renminbi market makes it a practical launchpad.
If successful, the region could pave the way for broader adoption without directly exposing China’s population to volatile assets. Additionally, state media has urged regulators to act quickly, highlighting that stablecoin development should come “sooner rather than later.”
Despite this potential, mainland crypto bans still stand. China’s September 2021 crackdown remains in effect. Still, ongoing developments suggest authorities may soften their stance in select areas under controlled environments.
Bitcoin Hoarding and FTX Fallout Stir Speculation
Moreover, speculation has intensified over China’s secret accumulation of Bitcoin. Several reports claim the country may be the second-largest BTC holder after the U.S. Yet, the government has neither confirmed holdings nor shared sale strategies.
Meanwhile, controversy surrounds the FTX bankruptcy case, with Chinese creditors objecting to payout freezes. They argue that while trading is banned, crypto ownership remains legal.
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