Insiders say China plans to launch renminbi-backed stablecoins in an effort to combat the U.S. dollar. However, the launch is held back by capital outflow concerns.
Summary
- China has reportedly begun testing renminbi-backed stablecoins.
- Stablecoin plans have been hindered by growing concerns over the nation’s financial control and fears of potential misuse.
In a recent article by the Financial Times, its been revealed that Chinese officials have zeroed-in on stablecoin testing as a potential way to combat the U.S’ stronghold on the market, following the success of Tether (USDT) and Circle’s (USDC) dollar-backed tokens.
China aims to use stablecoins to bypass traditional cross-border payment systems like Swift, which the government fears could be blocked in the event of a conflict with the U.S.
In the past two months, China’s financial regulators have called upon experts in the field to discuss how best to implement, issue and test out stablecoins pegged to the Chinese renminbi. However, experts have surmised that the project may run into a clash, as the fundamental technology goes against the nation’s need to tightly control its financial system.
According to one participant involved in the talks, any stablecoin project issued and approved by China must comply to the nation’s “specific national conditions.”
Considering China still prohibits crypto transactions and mining since a full ban was enacted in September in 2025, its need to keep the financial ecosystem closed off from the rest of the world may become a hindrance to its stablecoin venture.
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The central bank in particular, is worried about the kind of impact stablecoins would have on the nation’s capital outflow, specifically the potential of stablecoins being used for money laundering.
Chief executive of blockchain infrastructure firm Saga, Rebecca Liao, explained that stablecoin technology cannot be “centrally controlled.” This means that China may have a hard time trying to monitor or police the flow of funds that the renminbi-backed token facilitates.
“When they invest in this technology it will be taken to places that they do not like,” said Liao to the Financial Times.
China fears missing out on the stablecoin race
In the wake of Hong Kong’s Stablecoin Ordinance bill, many financial and commercial corporations such as JD.com, Animoca Brands and Standard Chartered have been looking to apply for issuer licenses.
Not only Hong Kong firms, Chinese institutions and businesses in the digital sector have also grown increasingly interested in gaining a stablecoin issuer license of their own. However, people familiar with the matter have confirmed that out of the four dominant state-owned Chinses banks, only one will receive a license from the Hong Kong Monetary Authority in its first batch.
So far, the HKMA has not said no to approving licenses for stablecoins backed by the renminbi.
Since early July, Chinese regulators have been in talks about softening the country’s stance on digital assets as stablecoin domination continues to advance on a global tier. At the time, companies and experts were pressuring Chinese regulators to issue yuan-pegged stablecoins.
Recent regulatory shifts have made stablecoins the focus of several global monetary developments, most recently in the United States with the GENIUS Act and Hong Kong with the Stablecoin Ordinance.
South Korean entities have also been vying for won-pegged stablecoins. South Korean digital payment firms KakaoBank and NaverPay have been two strong contenders that are interested in entering the stablecoin market.
Most recently, fanC and Initech have been the first to debut a Korean won-pegged stablecoin in an initial pilot. Though, it has yet to release the won-backed stablecoin publicly.
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