China is facing growing pressure from economists and policy advisers to explore stablecoins for cross-border payments.

This comes as the United States strengthens the dollar’s global dominance by adopting crypto technology.

Despite a strict ban on cryptocurrencies, recent comments from central bank officials have ignited discussions about the potential of stablecoins in global payments.

In June, People’s Bank of China Governor Pan Gongsheng highlighted that stablecoins could transform international finance, particularly amid geopolitical tensions.

Former central bank governor Zhou Xiaochuan mentioned that stablecoins linked to the dollar could promote further dollarization.

He also noted that yuan-based stablecoins might enhance the global presence of the Chinese currency.

China has historically approached cryptocurrencies cautiously due to concerns about financial stability and capital controls.

Stablecoins, generally pegged to traditional currencies such as the US dollar, are becoming popular for their efficiency and speed in cross-border payments.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ A strategic shift: China’s approach to stablecoins contrasts with cryptocurrency ban

China’s current exploration of stablecoins represents a significant evolution from its sweeping cryptocurrency prohibitions implemented in 2017, when the government banned ICOs and exchanges due to financial stability and capital flight concerns 1.

Despite these restrictions, China has consistently invested in blockchain technology while maintaining strict control over cryptocurrency activities 2.

The recent Stablecoins Bill passed in Hong Kong on May 21, 2025, creates a comprehensive regulatory framework requiring issuers to secure licenses and maintain fully backed reserve assets, suggesting a carefully controlled approach to digital assets 3.

This regulatory model allows China to explore stablecoin benefits while maintaining tight oversight, with implementation set for August 1, 2025, marking a significant milestone in China’s digital finance strategy 3.

Hong Kong’s approach demonstrates how China can experiment with stablecoins without contradicting mainland cryptocurrency restrictions, creating a controlled environment for innovation.