Key points
In the midst of the US regulatory shift to market encryption, Beijing is preparing to illuminate its first government -backed Stablecoin, which is a digital currency associated with Chinese yuan (CNY). This comes despite persistent rumors of an extensive ban on encryption.
According to the latter reportThe Central Bank of China, the People’s Bank of China (PBOC), works closely with Hong Kong’s regulators to introduce a Stablecoin regulated framework. The purpose behind this development is to boost Yuan’s global appeal and face the dominance of Stablecoins backed by the US dollar such as Tether (USDT) and USD Coin (USDC).
Hong Kong, which operates with a separate financial system from mainland China, has already laid the foundations. On August 1, 2025, the new Stablecoins Decree in the city came into force, allowing companies licensed to issue digital brands.
Now, Beijing seems ready to take advantage of this frame to promote with a Renminbi-Pepegged Stablecoin. This is a digital asset designed to facilitate cross -border trade while maintaining capital controls intact
Why now? US station growth and China’s fear of falling back
The decision comes as the US accelerates its own encryption adoption. In July, President Donald Trump signed the genius law, creating the first federal regulatory framework for dollars.
Analysts say this has put pressure on China to act with the fear of loss of influence in the evolving landscape of digital funding.
“The US is going to Crypto and China does not want to be left behind,” said Zhiguo He, Professor of Economics at Stanford University. “There is a real fear of losing.”
This fear is justified. Over 99% of Stablecoins today are in dollars, boosting Greenback’s dominance in world trade. Meanwhile, Yuan’s share in international payments has fallen to just 2.89%, the lowest in almost two years.
A stablecoin backed by yuan could change that. By allowing faster, cheaper cross-border transactions, China hopes to make Renminbi more attractive to businesses-especially US cautious penalties or dollar volatility.
Hong Kong’s experiment with Stablecoin: A controlled gateway to encryption
Unlike Bitcoin or Ethereum, which remain banned in mainland China, Stablecoins offer Beijing a way to embrace blockchain innovation without abandoning control.
Hong Kong is going to be the test ground. The main Chinese companies, including JD.com and the Ant Group, have already applied for Stablecoin licenses under the new rules of the city. Their proposal? A digital token supported by Yuan offshore (CNH), which is freely circulated outside China’s strict capital controls.
“A offshore Yuan Stablecoin could serve as a bridge between China and world markets,” said Wang Yongli, a former Vice President of the Bank of China. “It’s a way of modernizing payments without destabilizing the domestic financial system.”
Still, challenges remain. Competition with the established Stablecoin Dollar ecosystem will not be easy. Like Chen Lin, director of the Center for Financial Innovation and Development at the University of Hong Kong, he put it: “Hong Kong is making efforts, but there is still a long way to go.”
Rumors of encryption
While China is moving forward with Stablecoin plans, rumors of a complete encryption ban have reappeared. Social media positions in May claimed that Beijing would even criminalize private property property, sending Bitcoin for just under $ 105,000.
But experts say these fears are excessive. No PBOC official statement confirmed a new ban and analysts believe that reports are recycling old news from China’s suppression in 2021.
Instead, Beijing’s focus appears to be in digital assets that control the state-such as the digital Yuan (e-CNY), which has been processed over 7 trillion yuan ($ 977 billion) in transactions from 2020.
“China does not prohibit encryption because it hates blockchain,” said Li Yang, a leading economist at the Chinese Academy of Social Sciences. “This is the control. The goal is to incorporate Stablecoins and CBDC in a way that serves national interests.”
At present, China adopts a measured approach. Only one of the four major government banks in the country is expected to receive an initial Stablecoin license, with tests that may be limited to business transactions.
PBOC also implies that this does not mean a broader encryption legitimacy. The restrictions of the mainland in Bitcoin and Ethereum remain firmly in place.