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As the United States pushes ahead in its bid to become the global hub for cryptocurrency innovation, China appears to be quietly reassessing its hardline stance. On August 1st, Hong Kong began accepting applications for stablecoins backed by the Hong Kong dollar. Though cryptocurrency trading remains banned on the mainland, this move may signal deeper ambitions , possibly laying the groundwork for a future renminbi-backed token.
Subtle but significant signals from Chinese officials and state media point to a growing openness toward fiat-backed stablecoins. The shift is happening just as these digital assets are gaining traction worldwide , especially for cross-border payments, remittances, and digital commerce , thanks to their price stability and regulatory momentum.
In July 2025, the U.S. passed the GENIUS Act, its most comprehensive stablecoin legislation yet. The law requires issuers to hold full reserves in cash or short-term Treasury bills , effectively bringing stablecoins under the umbrella of traditional finance. This effort fits neatly into President Donald Trump’s broader deregulatory agenda. By clearing the path for digital asset adoption, the administration is positioning the U.S. as the epicenter of next-generation finance.
The ripple effects are being felt far beyond Washington. In China, where officials have historically maintained strict bans on crypto trading and mining, the global shift toward regulated stablecoins is becoming harder to ignore. In recent months, prominent Chinese economists, former central bank officials, and state-affiliated media have started advocating for a yuan-pegged stablecoin. Some now describe the absence of such a token as a strategic vulnerability, particularly as dollar-backed stablecoins expand their footprint in international settlements. The People’s Bank of China has also taken note. In June, Governor Pan Gongsheng publicly acknowledged the growing use of stablecoins for cross-border transactions. Not long after, state media began calling for accelerated progress toward developing renminbi-backed digital tokens.
Hong Kong sits at the center of this evolving story. Already responsible for more than 70% of offshore renminbi transactions, the city is well positioned to serve as a launchpad for a CNH stablecoin , one pegged to the offshore version of the yuan. With the new Stablecoin Ordinance now in effect, there is a clear legal framework for issuing and supervising HKD-backed tokens , and possibly CNH ones next.
Major players are already stepping forward. A consortium including Standard Chartered, HKT, and Animoca Brands has announced plans to apply for a stablecoin license under the new rules. Meanwhile, tech giants like JD.com are reportedly lobbying for permission to pilot renminbi-backed digital currencies , starting outside the mainland’s capital controls. The implications stretch far beyond China. Dollar-pegged stablecoins, by driving up demand for U.S. Treasuries and other dollar-denominated assets, are reinforcing the financial power of the United States. Tether, the largest stablecoin issuer, is now one of the top 10 holders of U.S. Treasury bills, a stark example of how digital currencies are becoming deeply embedded in global finance.
This trend complicates China’s long-running push for de-dollarization and wider use of the renminbi in international trade. As stablecoins become part of everyday financial infrastructure, the dominance of dollar-backed tokens threatens to erode Beijing’s ambitions to elevate the yuan’s global standing. Some former Chinese officials have gone further, framing the U.S. stablecoin push not just as financial innovation, but as a geostrategic maneuver, a new lever of American influence in the international monetary system.
Of course, significant barriers remain. Chief among them being China’s strict capital controls, which are designed to prevent capital flight by limiting cross-border fund flows. These controls make it nearly impossible to launch a fully liquid, onshore stablecoin backed by the domestic yuan.
An offshore alternative may offer a more viable path. A CNH stablecoin , issued from jurisdictions like Hong Kong , could deliver many of the same strategic benefits without violating the mainland’s capital restrictions. With the legal groundwork now in place, such a project is no longer theoretical. Still, regulators remain cautious. The Hong Kong Monetary Authority has warned of the risks associated with privately issued digital currencies, especially after high-profile failures like TerraUSD. The collapse of that project triggered a digital bank run , a reminder that even algorithmic confidence can vanish in an instant.
HKMA Chief Eddie Yue has advised the public to stay grounded, warning against “overly idealistic” expectations surrounding stablecoins. He’s not alone, many central bankers worry that widespread adoption of private tokens could weaken monetary policy and introduce new vectors of systemic risk.
China’s stance is clearly evolving. The shift is not driven by enthusiasm for crypto, but by the strategic reality that digital finance is reshaping the global order, and leaving no room for spectators. As the U.S. establishes regulatory leadership and Hong Kong builds out the technical and legal infrastructure, the conditions for a yuan-backed stablecoin, particularly offshore , are rapidly taking shape.
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