For years, China viewed stablecoins with a wary eye. I remember reading the People’s Bank of China’s (PBOC) white paper on its e-CNY project back in 2021. It painted a picture of global stablecoins bringing risks to the “international monetary system, payment and clearing system, monetary policies, cross-border capital flow management.” Beijing, it seemed, was deeply skeptical of private digital currencies, especially those like Facebook’s Libra.
- China is shifting its stance on stablecoins, viewing them as a way the US dollar is solidifying its power in Asia. This change is driven by the US’s actions in the digital asset space.
- The GENIUS Act in the US, which offers clear rules for fiat-backed stablecoins, is a key pressure point for China. This act is seen as a move by the US to dominate the global financial system.
- China is interested in regulated, offshore yuan (CNH) stablecoins to make the renminbi (RMB) a more practical choice for international payments. These could help expand the yuan’s reach while keeping currency controls.
Libra, of course, never saw the light of day. Yet, stablecoins like Tether’s USDT and Circle’s USDC have woven themselves into the very fabric of global finance. They are everywhere, particularly in Asia. They make things like supply-chain financing run smoother than ever before. It’s a quiet revolution, happening in the background of our daily transactions.
This widespread adoption has shifted Beijing’s stance. That old caution is giving way to a new sense of urgency. Stablecoins are now firmly on China’s agenda. Why the change of heart? They see these digital dollars as another way the US dollar is cementing its power in Asia’s financial systems. And that, my friend, is something Chinese authorities are not happy about.
Evan Auyang, the President of Animoca Group, shared some fascinating insights with CoinDesk. He told them China’s interest in stablecoins has been picking up speed. It’s been a trend for a while, but it’s really accelerating now that these digital assets are gaining traction on Wall Street.
“Right now, stablecoins are making a comeback for policymakers and interested issuers. The question is why?” Auyang asked. He pointed directly to the signals coming from the US, especially during President Trump’s time in office. “They’re actually pressuring China to act a lot faster,” he explained.
Animoca, by the way, is a Hong Kong-based Web3 fund. They have their fingers in many parts of the crypto space. So, Auyang’s perspective carries weight. He understands the currents flowing through this market.
A New Digital Frontier
The key pressure point, Auyang argues, is the recently passed GENIUS Act in the US. This act, for the first time, offers clear federal rules for fiat-backed stablecoins. It solidifies their place in the global financial system. Think of it as a digital extension of the dollar’s existing dominance. China simply cannot afford to ignore it.
Animoca isn’t just observing this trend. They are active players. The company is part of a group that includes Standard Chartered Bank and Hong Kong Telecom. Together, they are working on a stablecoin tied to the Hong Kong dollar (HKD). It shows a clear move to participate, not just react.
“When China looks at the GENIUS Act, the way they look at it is that the U.S. is going after the space,” Auyang said. He continued, “And if dollar right now is the dominant reserve currency … it’s always about these regular stablecoins that flow in the financial system to settle currency in light of trade tensions and direct bilateral trade deals. That matters.”
This is a stark contrast from the PBOC’s 2021 white paper. That document painted stablecoins as unstable and speculative. It lumped them in with volatile cryptocurrencies. But, as Auyang noted, the whole discussion has changed. The conversation has matured.
Beijing now sees a need to compete on blockchain networks. They are particularly interested in regulated, offshore yuan (CNH) stablecoins. These could help make China’s currency, the renminbi (RMB), or yuan as it’s often called, a more practical choice for international payments.
“If you are trying to make RMB more internationalized, but in a controlled way, this is it. The offshore CNH is it,” Auyang stated. He believes this type of stablecoin offers a way to expand the yuan’s reach while still keeping currency controls in place. It’s about having your cake and eating it too, in a financial sense.
A regulated stablecoin, whether HKD or CNH, can link to Chinese assets held onshore. These assets could then be placed onto public blockchains. This creates important new financial channels for the country. It’s a clever way to bridge traditional finance with the digital world.
While the e-CNY, China’s central bank digital currency (CBDC), has mainly focused on central banks and large institutions, the HKD or CNH stablecoin offers something different. Issued in Hong Kong or through public blockchain infrastructure, it provides a way to internationalize the currency. It does this while still respecting Beijing’s strict capital controls.
The Global Stablecoin Race
Another interesting possibility involves liquidity pools in Hong Kong. Think of a liquidity pool as a shared pot of tokens traders swap against. These pools could allow for HKD, CNH, and e-CNY transactions to settle. Beijing, Auyang pointed out, has a keen eye on HKD stablecoins. Hong Kong, with its independent legal system, acts as China’s financial sandbox.
“At some point in time, it’s going to be the stablecoin,” Auyang predicted. He believes that even international business-to-business payments will favor tokenized fiat over permissioned CBDCs. It’s a bold claim, but one that makes sense when you consider the ease of use and broader accessibility of stablecoins.
This shift isn’t just limited to China. The ripple effect is global. “Everybody’s going to do this after the U.S. passes the GENIUS Act. Every country is going to think about this. Every country will have a regulated stablecoin at some point in time,” Auyang said.
It’s important to understand this isn’t about overthrowing the US dollar. That would be an impossible task, given the sheer amount of liquidity the dollar commands worldwide. Instead, it’s about creating alternatives. It’s about choice.
“When I’m trading with my partners in Southeast Asia, there is deep enough liquidity out there in non-USD stablecoin pairs for that trade to happen,” Auyang explained. This means businesses can conduct trade without always relying on the dollar, fostering more regional financial independence.
Just four years ago, the PBOC’s white paper framed stablecoins as threats. Today, Beijing appears to be warming up to the idea that these digital assets have a significant role to play in the financial order of the future. It’s a remarkable change, one that signals a new chapter in global currency competition.
