<\/p>\n
As Washington rolls out stablecoin rules, voices in Beijing are warning it\u2019s time to catch up, or risk being left behind.<\/p>\n
Beijing might finally be warming up to stablecoins, but not without hesitation. In a sign that China may be rethinking its digital currency strategy, a state media article this week reportedly urged policymakers to stop delaying and focus on \u201cadapting to the trend of stablecoins,\u201d the South China Morning Post reports<\/a>, referring to the piece, published by Securities Times, a financial publication under the People\u2019s Daily.<\/p>\n The piece called on Chinese authorities to begin developing yuan-backed stablecoins and start laying out regulations as the U.S. just passed a stablecoin bill, giving regulated issuers the green light to mint dollar-pegged digital tokens.<\/p>\n Chinese analysts and officials seem concerned this U.S. head start could deepen the greenback\u2019s dominance in digital trade, and leave the yuan playing catch-up.<\/p>\n The article described stablecoins as an \u201cemerging payment tool\u201d that, while carrying risks, offer too many advantages to ignore. \u201cThe development of yuan-backed stablecoins should be sooner rather than later,\u201d it said, citing a broad consensus among industry insiders.<\/p>\n That\u2019s precisely where China\u2019s anxiety lies. \u201cFor China, which is promoting the global use of the yuan, proactively regulating stablecoins and therefore facilitating the internationalisation of the yuan might be a better solution,\u201d the Securities Times piece said.<\/p>\n The article adds to a flurry of voices in recent months urging Beijing to act, especially as trade tensions with Washington continue to escalate.<\/p>\n Liu Xiaochun, a deputy director at the Shanghai Finance Institute, told the outlet that yuan-based stablecoins could help China strike a balance between innovation and financial security. But he reportedly emphasized they shouldn\u2019t try to \u201ccompete directly\u201d with dollar-backed versions. Instead, the focus should be on \u201csupporting emerging economies\u201d and expanding yuan use in a more organic way.<\/p>\n <\/p>\n Hong Kong, meanwhile, has already moved ahead. It\u2019s set to launch a licensing regime for stablecoin issuers in August. But on the mainland, crypto trading remains banned and regulators haven\u2019t shown much appetite for changing that anytime soon.<\/p>\n The U.S., by contrast, is pushing forward. Last week, the Senate passed the GENIUS Act, a bill that sets the ground rules for stablecoin issuance, requiring reserves and compliance with anti-money laundering laws. The vote passed with bipartisan support, though some Democrats, including Senator Elizabeth Warren, warned the bill was too soft on potential conflicts of interest, particularly those tied to Trump-affiliated crypto ventures.<\/p>\n Still, industry voices cheered the move. Supporting the GENIUS Act, Christian Catalini, founder of MIT\u2019s Cryptoeconomics Lab, told<\/a> ABC News it \u201copens the floodgates\u201d for competition and innovation, with consumers seeing real benefits.<\/p>\n Analysts at China International Capital Corporation didn\u2019t miss the implications. In a note this week, they pointed out that most stablecoins are still pegged to the U.S. dollar. That alone helps reinforce the dollar\u2019s status, they wrote. It reduces costs and makes greenback transactions easier, which, in turn, encourages more international use of U.S. currency.<\/p>\n <\/p>\n The growing popularity of these digital dollars could even increase global demand for U.S. Treasuries, the CICC note said. But they also flagged potential downsides: rising geopolitical tensions and concerns over U.S. debt levels may eventually undercut confidence in the dollar. That could create an opening for other digital currencies, including, perhaps, a yuan-backed stablecoin.<\/p>\n Zhou Xiaochuan, former head of China\u2019s central bank, echoed that concern last week at the Lujiazui Forum in Shanghai. The rise of stablecoins, he warned, could accelerate \u201cdollarization\u201d in parts of the global economy.<\/p>\n As of press time, stablecoins represent a $261 billion market, according to CoinGecko. Of that, about 97% are dollar-pegged, with more than $1.4 billion backed by U.S. Treasuries.<\/p>\n Zhu Taihui, a senior fellow at the National Institution for Finance and Development under the Chinese Academy of Social Sciences, told the SCMP that offshore yuan-based stablecoins should be issued in Hong Kong \u201cas soon as possible\u201d and eventually expanded into China\u2019s free trade zones.<\/p>\n Meanwhile, China is ramping up efforts on a parallel front: the digital yuan, or e-CNY. At the same Lujiazui Forum, the central bank\u2019s current governor Pan Gongsheng pledged<\/a> to establish an international operation center for the currency in Shanghai, reiteratting Beijing\u2019s vision of a \u201cmulti-polar\u201d global currency system that isn\u2019t overly reliant on the dollar.<\/p>\n \u201cDeveloping a multi-polar international monetary system will help strengthen policy constraints on sovereign currency countries, enhance the resilience of the system, and better safeguard global financial stability.\u201d<\/p>\n Pan Gongsheng<\/p>\n<\/blockquote>\nNo direct competition<\/h2>\n
Growing concerns<\/h2>\n
Multi-polar currency<\/h2>\n
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