China is preparing to approve the first yuan stablecoin, expanding applications domestically and internationally.
The development of stablecoins in Hong Kong will be a first step for China to pilot and explore the potential of cryptocurrencies, supporting Blockchain technology and promoting access to the global digital market.
MAIN CONTENT
China allows the issuance of yuan stablecoins in Hong Kong as a pilot basis.
The global stablecoin market is surpassing a market cap of $275 billion, with the USD still dominating.
The opening of the crypto market in China boosts blockchain applications and the development of digital assets.
What are China’s goals in developing the digital currency stablecoin?
China wants to leverage stablecoins to expand the use of digital yuan domestically and internationally, while experimenting on the Hong Kong platform – which has been permitted to develop blockchain and cryptocurrency products.
After years of restricting stablecoins pegged to the yuan, the Chinese Communist Party has shifted direction, wanting to define the capabilities of stablecoins for payments and transactions. Previously, an offshore yuan stablecoin project was tested by Tether in 2018 but was unsuccessful.
How is the global stablecoin market fluctuating?
The global stablecoin market capitalization has surged, reaching approximately $275 billion, with USD-pegged stablecoins like Tether's USDT accounting for up to $271 billion in value. This demonstrates the overwhelming strength of the USD in the global cryptocurrency financial system.
The U.S. government has policies to promote the development of USD stablecoins, such as the GENIUS Act, enabling many companies to develop USD-based stablecoins. Meanwhile, China requires stablecoins to comply with the country's specific regulations and currently operates a CBDC under strict government control.
"The development of stablecoins in China must comply with legal requirements and strict controls to ensure financial safety and economic stability."
Pan Gongsheng – Governor of the People's Bank of China, June 18, 2024, Reuters
What is the impact of stablecoins on the Chinese and international cryptocurrency markets?
China's gradual opening to the cryptocurrency and Blockchain market will create a significant turnaround in the application of digital technology. Currently, China only allows citizens to own crypto assets but not trade them, and the laws are expected to change to be more accommodating.
Hong Kong is positioned as China's testing ground for cryptocurrency technology, attracting many global Web3 companies to apply for operational licenses. This helps accelerate the widespread adoption of asset digitization and Blockchain globally.
What can other countries learn from China's stablecoin strategy?
China has chosen strict controls to develop a national stablecoin while not missing opportunities to expand new financial technologies. This model helps balance technological innovation and financial system stability.
Using Hong Kong as a testing environment shows the importance of building a flexible legal framework that supports development while ensuring financial security and effective risk management.
Frequently Asked Questions
What influence can China have on the global stablecoin market?
With its scale and economic influence, China's stablecoin can create additional options for international transactions, counterbalancing USD stablecoins, promoting competition and innovation in the market.
Why did China choose Hong Kong as the center for stablecoin development?
Hong Kong has a relatively flexible legal framework and has been a testing ground for cryptocurrencies, making it easier for China to control and experiment before widespread adoption.
Can China's stablecoin be used abroad?
This is the goal to aim for; Vietnam and many other countries will monitor to understand the level of acceptance and application of the international digital currency stablecoin.
Does the development of stablecoins affect CBDCs?
Stablecoins and CBDCs have different roles; stablecoins are privately backed assets, while CBDCs are issued and tightly controlled by central banks.
Can stablecoins help accelerate the application of blockchain in China?
Yes, stablecoins are a key tool in promoting digital payments and DeFi applications, thereby stimulating broader blockchain technology development.
Source: https://tintucbitcoin.com/yuan-stablecoin-trung-quoc-canh-tranh-usd/
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