China is planning a major shift in its digital asset policy by considering the issuance of stablecoins backed by the yuan to enhance the global role of this currency.
This move could mark a complete turnaround from China's 2021 ban on cryptocurrency trading and mining, while also making strides in the global stablecoin race among major economies.
MAIN CONTENT
China is considering issuing yuan-backed stablecoins to promote the internationalization of this currency.
US dollar stablecoins account for over 99% of the global market share and are regulated under the US GENIUS Act.
Hong Kong and Shanghai are leading the plan to deploy yuan-backed stablecoins and promote cross-border payments.
How is China adjusting its stablecoin policy in the global context?
The Chinese government is preparing to consider a plan to enhance the global role of the yuan through stablecoins backed by the yuan.
If the plan is approved, this would mark a significant turnaround from the 2021 strategy to ban cryptocurrency trading and mining. China aims for the yuan to compete directly with the USD and euro in the international market. However, experts note that strict capital control regulations and a large trade surplus may limit the development of stablecoins here.
Previously, major Chinese tech corporations like JD.com and Ant Group had urged the Central Bank to approve yuan-backed stablecoins.
Why does the US dollar stablecoin dominate globally?
USD-backed stablecoins currently account for over 99% of the global stablecoin supply.
The US has established a strict legal framework for stablecoins through the GENIUS Act, signed by President Donald Trump, to create a stable and transparent development environment for stablecoins. This helps US dollar stablecoins maintain their dominant position in the global digital payment sector.
Why are Hong Kong and Shanghai leading in the deployment of yuan-backed stablecoins?
Hong Kong and Shanghai are playing central roles in testing and deploying yuan-backed stablecoins to enhance the yuan's role in international markets.
The Beijing government sees stablecoins as a tool to enhance the global status of the yuan, as the USD-backed digital currency becomes increasingly popular. Shanghai aims to form an international center for the digital yuan.
At the Shanghai Cooperation Organization summit, China is expected to discuss expanding the use of stablecoins and the yuan in cross-border trade. Countries like South Korea and Japan are also developing their own domestic stablecoin projects.
China may 'use yuan-backed stablecoins to act as a bridge connecting with global digital assets while promoting more efficient cross-border payments,' according to Morgan Stanley's analysis.
Morgan Stanley, August 2025 report
How does Hong Kong's stablecoin law affect the digital yuan?
The stablecoin law enacted by Hong Kong on August 1 has become one of the first frameworks in the world to tightly regulate issuers of stablecoins backed by fiat currency.
This law opens up the possibility of linking the digital yuan (e-CNY) with global digital assets, facilitating payments and conversions between stablecoins like USDT, USDC to e-CNY conveniently while complying with China's strict capital control regulations.
However, a Hong Kong Securities and Futures Commission official warns of increased fraud risks with the emergence of new regulations, advising investors to be cautious. Some companies suffered significant losses after the law came into effect, while others increased their stock values simply by announcing plans to apply for stablecoin operating licenses.
Frequently asked questions about China's yuan-backed stablecoin
What factors are causing China to change its policy on stablecoins?
Competitive pressure with the US dollar and the desire to diversify international finance drive China to consider yuan-backed stablecoins.
What factors contribute to the US dollar stablecoin's market dominance?
Thanks to the GENIUS Act, the US has established a transparent legal framework and promoted the widespread application of USD-backed stablecoins.
What is the role of Hong Kong in the development of yuan-backed stablecoins?
Hong Kong is the first legal center to regulate the issuance and trading of stablecoins linked to the yuan.
What is Shanghai doing to promote yuan-backed stablecoins?
Shanghai is building an international center for digital yuan and promoting cross-border payment solutions.
What risks does the stablecoin law in Hong Kong pose?
The new law raises fraud risks, and investors need to be cautious before participating in the stablecoin market.
Source: https://tintucbitcoin.com/stablecoin-nhan-dan-te-mo-rong-toan-cau/
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