In line with the United States’ comprehensive promotion of stablecoins, the Chinese Communist Party has also shifted its attitude towards stablecoins and cryptocurrencies, but is facing multiple challenges.
The latest move was a regulatory agency in Shanghai convening a meeting of local government officials to discuss strategic responses to stablecoins and digital currencies. This shift is significant considering Beijing’s authority banning cryptocurrency trading.
The Shanghai State-Owned Assets Supervision and Administration Commission held a meeting on Thursday (July 10) with the theme of responding to experts and large enterprises’ calls for developing stablecoins pegged to the Chinese yuan.
According to the agency’s official WeChat account, the Director of the Shanghai State-Owned Assets Supervision and Administration Commission, He Qing, stated at the meeting that there is a need to be “more sensitive to emerging technologies and strengthen research on digital currencies.”
Stablecoins are digital currencies pegged to real assets, with their value typically tied to a legal tender, commodity, or other assets, resulting in stable prices. According to data from the Bank for International Settlements, over 99% of stablecoins are currently priced in US dollars.
Stablecoins are regarded as the “digital cash” of the virtual world, as their cross-border payment processing time and costs are significantly lower than traditional financial systems, gradually reshaping the global payment ecosystem. However, the advancement of this technology also brings new challenges in terms of regulation and technological security.
The momentum of stablecoin development has been rapid in recent years, with global stablecoin transactions exceeding $27 trillion in 2024, surpassing the total transactions of Visa and Mastercard. The volume of stablecoin transactions in 2025 is expected to experience explosive growth, exceeding the daily transaction volume of mainstream cryptocurrencies and gradually challenging the market share of traditional payment giants.
While stablecoins account for only 7% of the total cryptocurrency market value, they carry over 60% of cryptocurrency transaction volume.
During a speech at the Lujiazui Forum in June, the Governor of the People’s Bank of China, Pan Gongsheng, mentioned central bank digital currencies and stablecoins for the first time.
Former PBOC Governor Zhou Xiaochuan, also speaking at the same forum, stated that USD stablecoins could facilitate dollarization or have a global impact.
Bloomberg reported that although officials from both systems did not indicate any intention of relaxing the ban on cryptocurrency trading in the onshore market, their proactive mention of these latest developments in the international payment system was intriguing.
Analysts suggest that the noticeable shift in the Chinese Communist Party’s official stance on cryptocurrencies – from banning them to actively discussing development – may be related to the US’ support for stablecoins.
In June, the US Senate passed the Stablecoin Act, supported by former President Trump, aimed at guiding and establishing the innovation of stablecoins. President Trump expressed his desire to sign the bill before August. This regulatory bill for stablecoins is expected to accelerate the use of USD-backed digital currencies in daily transactions.
Scott Bessent, the US Treasury Secretary, explicitly stated that stablecoins help reinforce the dominance of the US dollar in the global currency system. He believes that global users are more inclined to choose USD-backed stablecoins over central bank digital currencies from Europe or China, as investors deem the oversight of the private sector under US regulation more trustworthy.
A report from Morgan Stanley suggests that for Beijing, ignoring the trend of stablecoin development could lead to falling behind in the competition of digital infrastructure – especially as stablecoins become alternative mechanisms to traditional banking networks.
During an interview with NBC News in May, President Trump openly expressed his support for cryptocurrencies due to concerns about China’s influence in the digital infrastructure sector.
“I am very supportive of cryptocurrencies because I want to keep them away from China,” Trump said.
Trump warned that allowing competitors to lead in these areas might result in the US losing control over the financial system.
“Cryptocurrency is very important. It is new, very popular, and very hot,” he added.
During his 2024 campaign, Trump commented on the transformation of cryptocurrencies, stating, “If we don’t do it, China will.”
Trump advocated for cryptocurrencies to be “Made in America” during his campaign, aligning his shift with a broader US strategy of positioning America as a leader in emerging technologies, garnering support from the cryptocurrency industry and contrasting with the regulatory approach of the Biden administration.
Experts believe that developing a RMB stablecoin poses many challenges for the Chinese Communist Party and may not be feasible in the long run.
Firstly, the application of stablecoins still remains primarily limited to cryptocurrency transactions, partly due to concerns about financial fraud.
A report from Capital Economics in the UK indicates that while global usage of stablecoins is growing, progress has been hampered by the lack of regulation, with countries only recently beginning to establish regulatory mechanisms.
The report highlights the main issue with stablecoins being the lack of government-backed support akin to most legal tenders, making it challenging to fulfill their initial promise of full convertibility.
Additionally, the RMB has yet to become a fully freely convertible international currency.
Erica Tay, Head of Macroeconomic Research at the Bank of Malaysia, stated that a RMB-backed stablecoin faces challenges in achieving global success. This is due to the RMB’s global payment share still being around 4%, significantly lagging behind the US dollar. Currently, over 99% of stablecoins are priced in US dollars according to the Bank for International Settlements data.
US Treasury Secretary Bessent noted that the RMB falls short of becoming a global reserve currency due to its inability to be freely convertible.
Bessent remarked, “China has 1.4 billion people who want to send money out of China. They are subject to capital controls when sending out funds, while a prerequisite for a reserve currency is free trade.”
In the more legally well-framed US, more companies such as Amazon and Walmart are considering launching stablecoins.
According to Reuters, Chinese e-commerce giant JD.com and fintech giant Ant Group are pushing for the People’s Bank of China to authorize the issuance of RMB-based stablecoins to counter the increasing influence of dollar-pegged cryptocurrencies.
These companies are planning to apply for stablecoin licenses in Hong Kong, with the stablecoin legislation in Hong Kong set to take effect on August 1.
Due to concerns about financial system stability, mainland China banned cryptocurrency trading and mining in 2021.
Experts warn that stablecoins, despite being cryptocurrencies, also carry risks. While efficient for cross-border payments at a personal level, they may conceal redemption risks due to issuer concealing inadequate reserves; at a national level, stablecoins could erode the monetary sovereignty of countries outside the US.
Professor Fan Jiazhong from the Political Science Department at National Taiwan University warned Epoch Times that Beijing lacks many essential conditions.
He pointed out that the large-scale propaganda reports from the Chinese Communist Party are actually about minor measures and changes, “insignificant and lacking impactful,” “insufficient to alter the position of the RMB in the international clearing mechanism, nor capable of replacing the US dollar.”
“When it comes to touching everyone’s actual money, people will still consider cost-effectiveness, market orientation, and vote with their feet,” Fan Jiazhong said.