Why China Now Prefers Stablecoins Over Bitcoin
China turns to yuan-backed stablecoins to limit capital flight and rival U.S. dollar dominance. Hong Kong leads testing under strict rules.
Crypto Laddin
Author
After years of banning crypto activities, China is quietly testing the waters with stablecoins — not as a shift in ideology, but as a strategic financial maneuver.
The focus? Yuan-pegged stablecoins that can boost China's digital presence without loosening its grip on the financial system. Behind this move lies concern over capital outflows and the global spread of U.S. dollar-backed tokens like USDT and USDC.
Hong Kong is serving as a sandbox, issuing limited licenses to firms under tightly controlled regulation. These early approvals are targeted at business use only, keeping retail investors out for now.
The People’s Bank of China acknowledges that stablecoins are reshaping global payments. However, any allowed tokens must strictly comply with China’s financial framework. This isn't an open door for crypto — Bitcoin and Ethereum remain banned.
Still, the push for yuan-based stablecoins reflects a broader ambition: to compete in the global digital finance arena without compromising domestic control. China’s strategy is clear — digitize the RMB while keeping capital at home.
