China’s Tech Giants Urge Central Bank to Authorize Yuan-Based Stablecoins
Chinese tech giants JD.com and Ant Group are pushing the People’s Bank of China to allow the launch of yuan-based stablecoins in Hong Kong to counter the growing influence of U.S. dollar-linked cryptocurrencies.
The proposed stablecoins would be pegged to the offshore yuan, helping to promote the global use of the Chinese currency and fend off the dollar’s digital dominance. This move comes as Hong Kong races to establish a regulatory framework for stablecoins, competing with the United States for a greater reach in global digital finance and trade.
The lobbying efforts, if successful, would mark a significant shift in Beijing’s view on cryptocurrencies, which were banned in 2021. Stablecoins are digital tokens pegged to liquid assets, mostly the U.S. dollar, and use blockchain technology for instant, borderless transactions at low cost.
JD.com has argued that offshore yuan stablecoins are urgently needed to promote yuan internationalization. The company proposes allowing yuan stablecoin issuance in Hong Kong before expanding to offshore markets within China’s free trade zones.
The global stablecoin market is currently around $247 billion, with over 99% being U.S. dollar-denominated. China’s exporters are increasingly using dollar stablecoins like Tether due to capital controls and geopolitical tensions, undermining the yuan in trade settlement.
Chinese policymakers are becoming increasingly interested in stablecoins despite the country’s cryptocurrency ban. PBOC governor Pan Gongsheng recently noted that the boom in digital currencies and stablecoins poses huge challenges to financial regulation.
The potential approval of yuan-based stablecoins could reshape China’s strategy for promoting international use of the yuan, a key ambition for the world’s second-largest economy.
