What happened?
China is considering shifting from a comprehensive ban on cryptocurrencies to allowing and even promoting stablecoins backed by the Renminbi, in order to challenge the absolute dominance of the dollar and pave new pathways for the long-term strategy of 'Renminbi Internationalization'.
This plan is not just talk; Hong Kong and Shanghai, as two financial centers, will play a key role. With its recently enacted stablecoin regulatory framework and international financial environment, Hong Kong will become a major testing ground for offshore Renminbi stablecoins, while Shanghai will rely on its digital Renminbi operational center to explore technology and applications.
In the context of the United States actively promoting a regulatory framework for dollar stablecoins to consolidate its global influence, China's move is a reciprocal strategic response. It signifies that stablecoins are no longer merely financial technology products, but are viewed by both major countries as key leverage affecting future global capital flows and geopolitics.
Why is China urgently launching the 'Renminbi Stablecoin'?
According to (Reuters) citing informed sources, in order to counter the dominant position of the dollar in the global stablecoin market and vigorously advance the long-term strategic goal of Renminbi internationalization, China is considering approving stablecoins backed by the Renminbi, which would represent a significant reversal in its attitude towards digital assets.
(Reuters) reports that the highest administrative body of China, the State Council, is expected to review and possibly approve a roadmap to promote the globalization of the Renminbi as early as this month (late August). This plan is expected to include specific targets for the use of the Renminbi in the global market, the division of responsibilities among domestic regulatory agencies, and key risk prevention guidelines.
Insiders reveal that the core part of this plan is to catch up with the United States in the field of stablecoins. As the Trump administration actively promoted a regulatory framework for dollar stablecoins to consolidate its global influence, Beijing also regards financial innovation (especially stablecoins) as a highly potential tool in the context of escalating geopolitical tensions.
In addition, senior Chinese leaders are expected to hold a special study meeting at the end of this month focusing on Renminbi internationalization and stablecoin issues, setting the direction for their application and development.
Current market situation and challenges
Currently, the dollar dominates the stablecoin market, accounting for over 98% of the total market value of global stablecoins. In contrast, according to data from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), as of June this year, the share of the Renminbi in global payment currencies has fallen to 2.88%, a new low in two years, ranking sixth, far below the dollar's 47.19%.
Although China has long hoped that the international status of the Renminbi could match its strength as the world's second-largest economy, strict capital controls have always been a major obstacle. Market participants believe that these restrictions will also be key challenges that the development of Renminbi stablecoins needs to overcome.
However, the potential of the global stablecoin market is immense. According to data from a cryptocurrency data provider, the current market size is about $247 billion, but Standard Chartered Bank predicts that by 2028, this number could grow to $2 trillion.
Hong Kong and Shanghai will be pilot programs
Both Hong Kong and Shanghai will become the two main cities to rapidly promote this new project.
As an international financial center, Hong Kong's highly anticipated (Stablecoin Issuer Regulation) has come into effect on August 1, making Hong Kong one of the first markets globally to implement comprehensive regulation for fiat-backed stablecoins. Previously, Huang Yiping, a member of the Central Bank's Monetary Policy Committee, stated to the media that launching offshore Renminbi stablecoins in Hong Kong is 'a possibility'.
At the same time, China's commercial center, Shanghai, is also establishing an international operational center for the digital Renminbi. The financial infrastructure and degree of internationalization of these two cities make them ideal launchpads for promoting Renminbi stablecoins worldwide.
Sources also added that China is expected to discuss expanding the use of the Renminbi with some member countries at the Shanghai Cooperation Organization (SCO) summit to be held from August 31 to September 1 in Tianjin, and may even discuss the possibility of using stablecoins for cross-border trade and payments.
If approved, this move would mark the most significant policy shift in China since it comprehensively banned cryptocurrency trading and mining in 2021. This could not only reshape the global digital currency landscape but also shows that China has adopted a more proactive and pragmatic approach in global fintech competition.
What about Taiwan?
The current attitude of the Taiwanese government towards stablecoins is gradually shifting from a single aspect of 'anti-money laundering' to a phase of 'comprehensive regulation', with an overall tone of caution and gradual progress. The regulatory authorities recognize the potential payment functions and financial risks of stablecoins and are actively constructing a more comprehensive regulatory framework.
Main regulatory authority: Financial Supervisory Commission
The Financial Supervisory Commission is the main regulatory body for Virtual Asset Service Providers (VASP), and its core plan is to promote the legislation of the (Virtual Asset Service Act) draft. This draft specifically includes regulations for the issuance and management of stablecoins, meaning that stablecoins will no longer exist in a legal gray area.
The Financial Supervisory Commission has announced the draft of the (Virtual Asset Service Act) in March 2025 and has entered a critical legislative phase, aiming to complete the third reading by the end of 2025.
Guardians of financial stability and monetary policy: Central Bank
The role of the central bank focuses on providing professional opinions from the perspective of monetary sovereignty, payment system security, and overall financial stability, while the central bank currently views stablecoins as 'tokenized payment tools'.
The Central Bank believes that if stablecoins are widely used for payments in the real economy, it will bring money laundering, terrorist financing, operational risk, and systemic risk. Therefore, they must be subject to the same level of regulation as other payment tools to ensure the sound operation of the payment and financial system.
The Director of the Central Bank's Business Bureau, Xie Fengying, clearly suggested at a public hearing that if stablecoins are used for payments, their regulatory intensity should refer to the existing (Regulations for the Management of Electronic Payment Institutions).
However, the Central Bank of Taiwan has also emphasized multiple times that although it has proposed several recommendations for the supervision of stablecoins, there are currently no plans to issue a Central Bank Digital Currency (CBDC) or a New Taiwan Dollar stablecoin.
Reference: Reuters, Cointelegraph