China’s tech giants push for yuan-based stablecoin, sources say

Chinese tech companies JD.com and Ant Group are lobbying the People’s Bank of China (PBOC) to authorize the use of yuan-based stablecoins, according to sources familiar with the discussions.

They propose launching stablecoins in Hong Kong that would be pegged to the offshore yuan.

The goal is to promote the Chinese currency internationally and reduce the dominance of US dollar-linked cryptocurrencies.

This initiative aligns with Hong Kong’s efforts to create a regulatory framework for stablecoins, enhancing its position in global digital finance.

If approved, this move could indicate a shift in Beijing’s approach to cryptocurrencies, which were banned in 2021. It may further the internationalization of the yuan.

JD.com and Ant Group also plan to issue Hong Kong dollar-backed stablecoins under new legislation effective August 1.

JD.com believes that yuan-pegged stablecoins are essential for advancing the currency’s global presence, according to sources.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ China’s pragmatic shift from cryptocurrency ban to controlled innovation

China’s approach to digital currencies has evolved significantly since its 2021 cryptocurrency ban, reflecting a pragmatic adaptation to global financial realities.

While cryptocurrencies remain banned in mainland China, the lobbying for yuan-based stablecoins represents a strategic pivot to maintain control while addressing digital currency innovation needs 1.

This pattern of controlled innovation mirrors China’s broader blockchain strategy. The government has invested heavily in blockchain technology while strictly regulating its financial applications, separating the technology’s utility from its potentially disruptive financial aspects 1.

The proposed stablecoin strategy represents a calculated middle ground: leveraging the efficiency of blockchain for cross-border payments while maintaining state oversight, unlike the decentralized cryptocurrencies that were banned.

China’s approach contrasts with other major economies like Japan, which fully recognized Bitcoin as a legal payment method, and the United States, which is establishing regulatory frameworks that legitimize dollar-pegged cryptocurrencies 2.