China is preparing to allow the launch of its first renminbi stablecoins digital tokens pegged to fiat currency value as part of an effort to internationalize the yuan.
Author: Sahil Thakur
According to a report by The Financial Times, China is preparing to allow the launch of its first renminbi (yuan) stablecoins digital tokens pegged to fiat currency value as part of an effort to internationalize the yuan and challenge the dominance of U.S. dollar-backed tokens in global finance.
The push comes as Chinese policymakers grow increasingly concerned that the rise of dollar-denominated stablecoins is reinforcing the greenback’s role as the global reserve currency. However, the move also exposes tensions between the desire to modernize payment systems and the Communist Party’s need for strict capital controls and financial oversight.
Hong Kong, which operates under a more flexible regulatory regime than Mainland China, recently passed legislation allowing licensed entities to issue fiat-backed tokens, including those tied to the yuan. The Hong Kong Monetary Authority (HKMA) is reportedly preparing to grant a limited number of licenses starting in 2026.
However, officials have stressed a cautious approach. “HKMA’s priority is stability and control at launch,” said Paul Tang, director of the Hong Kong Money Service Operators Association. Initial use cases are expected to be business-to-business focused, limiting broad retail adoption.
The HKMA has also been strict with applicants during its stablecoin “sandbox” program, vetting use cases, reserve management plans, and legal frameworks for dispute resolution.
The Financial Times report notes that China’s central bank and financial regulators have recently convened experts to explore crypto-related strategies. Central bank governor Pan Gongsheng acknowledged in June that stablecoins have “fundamentally reshaped the traditional payment landscape.”
Still, experts close to the process say Beijing’s primary concern is capital flight. Unlike dollar-based stablecoins, which are widely used for cross-border liquidity, a yuan stablecoin could offer the same freedom, but at the cost of the state’s ability to monitor and restrict fund flows.
“This is not technology that can be centrally controlled,” said Rebecca Liao, CEO of blockchain firm Saga. “When they invest in this technology, it will be taken to places that they do not like.”
The yuan itself adds complications. There are two versions: an onshore (CNY) and offshore (CNH) yuan, each trading at slightly different exchange rates. The existence of this dual-track system raises questions about how a stablecoin would be structured and which version it would reflect.
Despite Beijing’s ambitions, the yuan has struggled to gain international traction, even among geopolitical allies like Russia and Iran. The country also has a checkered history with stablecoins. In 2019, Tether launched a CNH-pegged stablecoin, but it saw minimal adoption and was eventually abandoned after the arrest of its local Chinese partner.
The FT report further notes that only one of China’s four state-owned banking giants is likely to receive an initial license from the HKMA, despite widespread interest from state-linked firms.
A stablecoin tied to the yuan could help China circumvent traditional systems like SWIFT and build resilience against future financial sanctions. But success hinges on Beijing’s willingness to loosen capital controls on something it has historically resisted.
As Lin Chen, director of the Centre for Financial Innovation and Development at the University of Hong Kong, put it: “It’s quite challenging to compete with the US dollar-backed stablecoin system. Certainly, Hong Kong is making its own efforts, but there’s still a long way to go.”
| Currency | Stablecoin(s) | Type | Issuer/Details |
|---|---|---|---|
| 🇪🇺 Euro (EUR) | EUROC, EURS, EURt, agEUR | Fiat-backed & Algorithmic | Circle, Stasis, Tether, Angle Protocol |
| 🇬🇧 British Pound (GBP) | GBPT, PYGBP | Fiat-backed | Tether, PayPal |
| 🇯🇵 Japanese Yen (JPY) | GYEN, JPYC | Fiat-backed / Prepaid | GMO Trust, JPYC Ltd |
| 🇨🇭 Swiss Franc (CHF) | XCHF | Fiat-backed | Sygnum |
| 🇨🇳 Chinese Yuan (CNY) | CNHC | Fiat-backed | Offshore CNH-based |
| 🇨🇦 Canadian Dollar (CAD) | QCAD | Fiat-backed | Stablecorp |
| 🇸🇬 Singapore Dollar (SGD) | XSGD | Fiat-backed | StraitsX |
| 🇦🇺 Australian Dollar (AUD) | AUDT, TrueAUD | Fiat-backed | Chrono.tech, TrustToken |
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