For years, the world has been watching China’s efforts to establish the digital yuan as a major player on the global stage. However, despite high-profile trials and substantial government support, the digital yuan hasn’t yet caught on internationally as Beijing likely expected.
Meanwhile, a quiet pivot is underway in Beijing, where blockchain startups are piloting yuan-backed stablecoins — a possible fallback for extending the currency’s global footprint — just as Washington moves to clear the way for dollar-linked stablecoins to scale abroad.
In mid-July, Chinese financial news outlet Sina Finance reported that Conflux Network, a Chinese Layer 1 blockchain backed by the Shanghai government, had teamed up with fintech company AnchorX and Shenzhen-based public firm Eastcompeace Technology to create stablecoins tied to the offshore yuan, known as CNH.
The stablecoins are expected to circulate in countries involved in China’s Belt and Road Initiative (BRI), a massive international development project spanning over 140 countries, including Singapore, Indonesia, Malaysia, and Kazakhstan.
Conflux Network CTO Dr. Guang Yang told The Defiant that Conflux 3.0 aims to address the “security and auditing needs critical to stablecoin adoption by focusing on compatibility.”
“As part of China’s national key R&D program, Conflux is also piloting cross-border stablecoin payment applications across Belt and Road countries—paving the way for real-world Web3 utility,” Yang said.
AnchorX’s head of product, Jozey Zhou, explained that as part of the collaboration, AxCNH is designed to “streamline cross-border payments and trade within Belt and Road countries.”
“While not yield-bearing, AxCNH prioritizes stability and transparency. Independent audits are in progress and will be shared once finalized,” Zhou added.
Complex Environment
The move stands out given that China still bans crypto trading and mining, while Hong Kong is taking a more open approach with a stablecoin licensing system starting on August 1. Big tech firms like JD.com and Ant Group are also said to be pushing Beijing to allow offshore yuan-based stablecoins as global competition intensifies.
Building anything blockchain-related in China has never been a straightforward task. In May 2023, Shanghai authorities detained the team behind CNHC Group — later rebranded as Trust Reserve — the issuer of the offshore yuan-pegged CNHC and Hong Kong dollar-pegged HKDC stablecoins, backed by KuCoin Ventures and launched on Conflux.
The group was suspected of unlicensed stablecoin issuance and potential financial misconduct, and their Pudong office was sealed under a judicial order. No formal charges or resolution have been made public since. KuCoin Ventures did not immediately respond to The Defiant’s request for comment.
Simpler Alternative
While China continues to expand real-world use cases for its digital yuan, the U.S. appears to be charting a different course, placing greater emphasis on privately issued, dollar-backed stablecoins.
In late July, the House of Representatives passed a trio of crypto-related bills aimed at bringing regulatory clarity to the space. Chief among them is the GENIUS Act, which laid out federal rules for stablecoins pegged to the U.S. dollar.
The shift in Washington hasn’t necessarily gone unnoticed in Beijing. In recent weeks, even state-linked Chinese media have begun nudging policymakers to take the stablecoin space more seriously.
For instance, an article published in Securities Times — a publication under the umbrella of the People’s Daily Group, the media arm of the Chinese Communist Party — urged authorities to “adapt to the trend of stablecoins” before the moment passes. Waiting too long, the piece warned, could mean missing a “golden opportunity” to expand the yuan’s global footprint.
Experts cited in the article argued that supporting and regulating yuan-based stablecoins might prove to be a more practical path than relying solely on a central bank-issued digital currency.
Taken together, these signals suggest a quiet recalibration in China’s approach to digital currency. The digital yuan may still be the centerpiece of Beijing’s ambitions, but yuan-backed stablecoins — especially those issued offshore — could represent a more nimble, globally palatable alternative.
