China is rethinking its stance on stablecoins, once flagged as systemic risks, as the rise of U.S.-pegged digital dollars across Asia challenges Beijing’s financial influence.
Back in 2021, China’s central bank issued strong warnings about the dangers of global stablecoins, describing them as a threat to monetary policy, financial sovereignty, and cross-border capital controls. But with U.S. stablecoins like Tether’s USDT and Circle’s USDC now embedded in Asia’s financial infrastructure, Beijing’s tone is changing.
The Dollar’s Digital Grip
What’s driving the shift? The U.S. GENIUS Act, passed earlier this year, offers federal-level regulatory clarity for fiat-backed stablecoins. It’s a move that many see as reinforcing the U.S. dollar’s dominance in digital finance—particularly in global trade and settlement systems.
Animoca Group President Evan Auyang says this development has accelerated Chinese interest in building competing stablecoin infrastructure.
“Stablecoins are back on the table for regulators—not just as a crypto product but as a geopolitical tool,” Auyang said in an interview. “The GENIUS Act signals Washington’s intent to take the lead, and China doesn’t want to be left behind.”
China’s Strategic Pivot
China’s pivot isn’t about joining the crypto bandwagon. It’s about protecting economic sovereignty. Auyang said policymakers are now focused on launching offshore yuan (CNH)-based stablecoins and Hong Kong dollar (HKD)-backed tokens through regulated frameworks.
“If China wants to internationalize the renminbi without losing control, offshore stablecoins offer a middle path,” he explained. “CNH-backed tokens could become Beijing’s answer to dollar-backed stablecoins.”
Unlike the e-CNY, which has remained a central bank-driven institutional tool, CNH and HKD stablecoins could serve as bridges to global markets—without compromising China’s capital controls.
New Rails for Trade and Finance
Auyang, whose firm is developing a HKD stablecoin alongside Standard Chartered and Hong Kong Telecom, believes Hong Kong will serve as China’s sandbox for stablecoin experimentation.
“Public blockchains, when paired with regulated stablecoins, can connect to tokenized Chinese assets and create new financial rails,” he said.
This infrastructure could support liquidity pools in Hong Kong that facilitate real-time settlement across CNH, HKD, and e-CNY, enhancing the competitiveness of RMB in cross-border transactions.
A Global Shift Is Coming
According to Auyang, China isn’t alone in reassessing stablecoins. “After the U.S. passed the GENIUS Act, every major economy is now watching closely. We’ll see regulated stablecoins emerge across Asia and beyond,” he said.
This isn’t about replacing the dollar—but about building optionality. In Southeast Asia, Auyang notes, there’s already deep liquidity in non-USD stablecoin pairs, allowing businesses to settle trades without defaulting to dollars.
2021 vs. 2025: A Changed Narrative
Just four years ago, the PBOC dismissed stablecoins as speculative and destabilizing. Today, they’re being reconsidered as strategic assets for shaping the next chapter of global finance.
“At some point, even B2B payments will default to regulated stablecoins,” Auyang said. “Not because central bank digital currencies failed, but because the market prefers flexibility and interoperability.”
Market Overview
- Bitcoin (BTC): Trading around $118,000 after reaching $123,000 last week. Analysts warn of short-term pressure down to $115,000, but long-term signals remain bullish.
- Ethereum (ETH): Holding firm at $3,619, with strong support at $3,300 maintaining the uptrend.
- Gold: Down 0.6% to $3,410.26 as the U.S.-Japan trade deal eases investor demand for defensive assets.
- Nikkei 225: Gained 1.09% on optimism surrounding trade developments with the U.S. and EU.
- S&P 500: Rose 0.75% on Wednesday, with broad-based gains across U.S. indices as global trade momentum builds.
