China is ramping up efforts around stablecoins to counter U.S. dollar dominance, though capital controls limit the initiative to Hong Kong’s offshore renminbi market, where liquidity remains constrained.
Dr. Vera Yuen of Hong Kong University’s Business School told CoinDesk that Beijing’s approach is strategic. “CBDCs are mainly for domestic use. For international payments, stablecoins offer better interoperability, making them more suitable for cross-border transactions,” she said.
The move follows the U.S. GENIUS Act, which establishes a regulatory framework for dollar-pegged stablecoins, prompting China to accelerate its own plans. Evan Auyang, president of Animoca Group, said this law is pushing Beijing to treat stablecoins as critical infrastructure for global trade and settlement, rather than speculative instruments.
While the e-CNY remains China’s primary domestic digital currency—valued for control, traceability, and seigniorage—stablecoins offer clear advantages for international use. Offshore issuance will initially be limited to Hong Kong, though low CNH liquidity restricts broader adoption.
Elsewhere in Asia, Japan is preparing yen-backed stablecoins for domestic circulation, led by firms like Monex, SBI, and JPYC, signaling a regional push to keep pace with U.S. dollar tokens.
Beijing’s stablecoin strategy appears designed to complement the e-CNY, extending yuan influence abroad while retaining strict domestic control.
Market Snapshot
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- Ether (ETH): $4,500; historical trends suggest potential year-end gains.
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