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In 2021, China’s central bank warned that global stablecoins could bring risks and challenges to the “international monetary system, payment and clearing system, monetary policies, [and] cross-border capital flow management.” That quote, from the People’s Bank of China’s white paper on its e-CNY project, reflected the PBOC’s deep skepticism toward private-sector digital currencies, particularly Facebook’s Libra.
As it turns out, Libra never launched. But stablecoins like Tether’s USDT and Circle’s USDC are now deep inside the financial plumbing around the world, especially in Asia, making processes like supply-chain financing more efficient than ever.
As a result, Beijing’s caution on stablecoins is giving way to a sense of urgency. They’re on the agenda because they are seen as just another way the U.S. dollar is cementing itself in Asia’s financial pipework, and that’s not something the Chinese authorities are happy with.
Animoca Group President Evan Ayuang said in an interview with CoinDesk that China’s interest in stablecoins has been accelerating. It’s been that way for a while, but now it’s only increasing as they go mainstream on Wall Street.
“Right now, stablecoins are making a comeback for policymakers and interested issuers. The question is why?” he told CoinDesk. “It really has to do with the Trump presidency … all the signals that the U.S. is coming out and giving out, they’re actually pressuring China to act a lot faster.”
Animoca is a Hong Kong-based Web3 fund that has its hands in all things crypto.
The pressure point, he argues, is the recently enacted GENIUS Act which, for the first time, provides U.S. federal regulatory clarity on fiat-backed stablecoins and cements their role in the global financial system. Effectively, it could be seen as a digital extension of dollar hegemony, one that China can’t afford to ignore.
Animoca has its own stablecoin interests. It’s part of a consortium that includes Standard Chartered Bank and Hong Kong Telecom working on a Hong Kong dollar (HKD)-denominated stablecoin.
“When China looks at the GENIUS Act, the way they look at it is that the U.S. is going after the space,” Auyang said. “And if [the] dollar right now is the dominant reserve currency … it’s always about these regular stablecoins that flow in the financial system to settle currency in light of trade tensions and direct bilateral trade deals. That matters.”
There’s a clear contrast from the tone of the PBOC’s 2021 white paper, which portrayed stablecoins as destabilizing and speculative, lumping them alongside volatile cryptocurrencies. But, as Auyang noted, the conversation has shifted.
Beijing now sees the need to compete on blockchain rails, particularly through regulated, offshore yuan (CNH) stablecoins, which could help make the country’s currency — the reminbi (RMB), or, colloquially, the yuan — a more practical choice for offshore settlement.
“If you are trying to make RMB more internationalized, but in a controlled way, this is it. The offshore CNH is it,” Auyang said. “That stablecoin is the way to internationalize it that allows you to have the currency control still in place, but allows you to have offshore.”
A regulated stablecoin, be it HKD or CNH, can be connected to onshore Chinese assets that could be put onto public blockchains, thereby creating new and important financial rails for the country. While e-CNY use cases have typically revolved around central banks and institutions. The HKD or CNH stablecoin, issued in Hong Kong or through public blockchain infrastructure, offers a vehicle for internationalizing the currency while still respecting Beijing’s capital controlss.
Another option could be liquidity pools in Hong Kong that provide places for HKD, CNH, and e-CNY transactions to settle. Of course, he said, Beijing has its eye on HKD stablecoins as the City, with its autonomous legal framework, is China’s sandbox.
“At some point in time, it’s going to be the stablecoin,” he said, predicting that even international business-to-business payments will favor tokenized fiat over permissioned central bank digital currencies (CBDCs).
And this shift isn’t limited to China.
“Everybody’s going to do this after the U.S. passes the GENIUS Act. Every country is going to think about this. Every country will have a regulated stablecoin at some point in time,” he said.
This isn’t about overthrowing the dollar, which is an impossible task considering the liquidity it has.
“When I’m trading with my partners in Southeast Asia, there is deep enough liquidity out there in non-USD stablecoin pairs for that trade to happen,” he said.
The PBOC’s 2021 white paper framed stablecoins as threats. Four years later, Beijing seems to be warming up to the idea that they have a role to play in the financial order of the future.
Market Movements
BTC: Bitcoin is consolidating around $118,000 after last week’s $123,000 all-time high, with analysts warning of a potential dip to $115,000 amid fragile sentiment, profit-taking, and minor bearish signals, though onchain data suggests the uptrend could soon resume.
ETH: ETH remains in a strong uptrend above key moving averages, trading at $3,619 after a rally that pushed prices near $3,800, with $3,300 now acting as key support to maintain the bullish structure.
Gold: Gold prices fell 0.6% to $3,410.26 on Wednesday as a US-Japan trade deal eased trade war fears and dampened safe haven demand, though longer-term support remains from de-dollarization and central bank buying.
Nikkei 225: The Nikkei 225 rose 1.09% on Thursday, extending gains as optimism over trade deals with the U.S. and potential progress with the EU lifted Asia-Pacific markets.
S&P 500: U.S. stocks rose solidly on Wednesday—driven by optimism over the U.S.-Japan trade deal—with the Dow up over 1%, the S&P 500 gaining more than 0.75%, and the Nasdaq adding around 0.6%.
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Author: Sam Reynolds
