Crypto-ban in China: why Beijing is suddenly backtracking

China hates cryptos but realizes that stablecoins (stable cryptos) strengthen the US dollar. Solution: create its own stablecoins based on the yuan.

China vs cryptos: a complicated story

China has a toxic relationship with cryptocurrencies. Total ban + expulsion of Bitcoin miners in 2021, while they dominated the network.

Why? China has been developing its digital yuan (e-CNY) for a long time and refuses any competition.

The stablecoin problem

Stablecoin = stable crypto, generally backed by the US dollar.

Problem for China: despite the bans, stablecoins are exploding globally. Almost all linked to the US dollar = strengthening US dominance.

Chinese awakening

Pan Gongsheng (head of the Chinese central bank) admits that stablecoins have "transformed digital payments".

Response: create "made in China" stablecoins that comply with their requirements.

Hong Kong, official laboratory

Chinese strategy: ban in the territory, test in Hong Kong.

The Hong Kong Monetary Authority is currently developing yuan stablecoins.

Cautious approach according to Paul Tang (local expert):

Tests among companies first

Stability and control priorities

Fear of speculation and capital flight

Technical challenges

Blockchains considered: Conflux and Chainmaker.

But Chen Lin (University of Hong Kong) is realistic: "Difficult to compete with dollar stablecoins. Long way to go."

Conclusion

Chinese paradox: hating cryptos but needing to engage with them to counter the dominance of the digital dollar. A risky but necessary bet.