The topic of stablecoins has been hot recently.
• USA: Implementation in July 2025 (GENIUS Act) - signed by Trump, clarifying that stablecoins are non-securities assets, requiring 1:1 reserves in USD/short-term US Treasury bonds, prohibiting interest payments, providing legal protection for compliant issuance.
• Hong Kong: Release on August 1, 2025 (Stablecoin Regulations) - the world's first fiat stablecoin licensing system, requiring licensed operations, 100% high liquidity reserves, regular audits, attracting tech giants like Ant Group and JD.com to apply for licenses.
• EU: Full implementation of MiCA regulation - establishes regulatory standards for stablecoins, requiring issuers to have sufficient capital and risk management capabilities, providing compliance guidelines for the industry.
• China: Strictly prohibits from November 28, 2025—The central bank clearly defines stablecoins as virtual currencies, reiterates 'prohibition policies', and emphasizes their risks of money laundering and cross-border fund violations.
Why doesn't China compete with Europe and the United States for the discourse power of stablecoin rules? Why ban them outright? While Europe and the United States are busy establishing rules for stablecoins and vying for global rule-making power, why doesn't China join in, but instead opts for an outright ban? Don’t we want to take the initiative in the field of digital currency?
In fact, this matter is not as simple as 'being conservative' or 'giving up competition'; it is rooted in deep considerations based on our national conditions. Simply put: choose the right track, maintain the bottom line. Today, let's break it down and discuss it thoroughly. After reading, you will understand how rational China's move is.
First, clarify a misconception: China has never given up on the competition for rules in the digital currency field; it just hasn't chosen the 'controllable development of private stablecoins' path that Europe and the United States have taken. Instead, it has opted for a differentiated route that better fits our national conditions and can better control risks: seizing the rule-making power of sovereign digital currency (e-CNY) led by the central bank.
As for private stablecoins, it’s not that we don’t want to regulate them; it's that they fundamentally do not align with our financial system, and the cost of forced regulation far outweighs the benefits. Banning them is the safest choice.
The truth lies in these three core logics 👇
One, the attributes of private stablecoins inherently conflict with China's financial system. To put it simply, private stablecoins have three core characteristics:
• Decentralized.
• Can flow freely across borders.
• Issued by private companies.
Yet these characteristics happen to strike at the 'core bottom line' of China's financial system, and the two cannot be compatible. 'Controllable development' is essentially a difficult-to-implement pseudo proposition.
1. Capital controls are the 'firewall' of financial security. China implements strict capital controls; this is not conservatism but a key mechanism for resisting external financial shocks.
• Stablecoins are blockchain assets; as long as there is a wallet address, anonymous cross-border transfers can be made.
• Even with the introduction of more regulatory rules, it is still difficult to completely plug the loopholes.
• Once someone bypasses the foreign exchange channel and transfers funds abroad on a large scale through stablecoins, it will trigger capital outflows and impact the stability of the renminbi exchange rate—this is an absolutely unacceptable risk. Europe and the United States can regulate stablecoins because their capital accounts are open and cross-border regulatory cooperation is mature. China's financial environment has not reached that level yet; forcibly pursuing 'controllable development' is equivalent to leaving a 'backdoor' for financial security.
2. The right to issue currency is the core of national sovereignty. China has always insisted: the central bank must monopolize the right to issue currency.
• Private stablecoins are essentially 'currency-like assets issued by private companies'.
• Even if pegged to the renminbi or the dollar, once widely circulated, it will split the currency issuance rights and weaken the effectiveness of monetary policy.
• If the central bank wants to regulate the money supply, but the market heavily relies on private stablecoin transactions, policy transmission will fail—this directly touches the sovereignty bottom line. Europe and the United States allow private stablecoins because their monetary sovereignty is sufficiently solid and regulation can confine them within a controllable range.
However, within China's monetary governance logic, private institutions do not have the space to engage in currency issuance, not even the 'controllable' ones.
3. The cost of 'controllable regulation' is too high; at this stage, we cannot bear the burden of European and American stablecoin regulation, relying on three main pillars:
• A comprehensive anti-money laundering system; • Technology that can monitor decentralized transactions; • Mature cross-border regulatory cooperation. These are still under construction in China.
• The anonymous transactions of stablecoins are difficult to trace and can easily be used for money laundering and fraud, posing challenges for regulatory investigations.
• Ordinary domestic investors lack awareness of the risks associated with crypto assets, making them susceptible to misleading claims of 'guaranteed returns', leaving them with no recourse for rights protection.
• Forcibly pushing for 'controllable development' will either lead to regulatory blind spots or require huge investments with minimal returns, resulting in a loss.
Secondly, it's not that we don't want to seize discourse power, but we have switched to a higher-level track: the digital renminbi is the core card. Many people mistakenly believe that 'banning stablecoins = giving up rule-making power'; in fact, it is just the opposite: China has jumped out of the 'private stablecoin track' set by Europe and the United States and has chosen the higher-dimensional 'sovereign digital currency track.'
The advantages of the digital renminbi (e-CNY): tailored for regulatory logic.
• Dual-layer architecture: central bank—commercial banks, with the central bank overseeing everything while banks implement it, balancing efficiency and control.
• Legal tender: has the force of law and will not dilute monetary sovereignty. • Controllable anonymity: protects privacy in daily consumption through anonymity; can be traced in cases of illegal activities, balancing anti-money laundering with capital controls.
• The central bank has complete control: monetary policy transmission is not disturbed and perfectly fits the Chinese financial system. The hierarchical differences in rule-making power.
• Private stablecoins (like USDT, USDC) may be popular, but their essence still serves the hegemony of the dollar, with the rules ultimately controlled by the issuing country.
• The digital renminbi is the digital form of sovereign currency, and the competition is for: the global circulation rules of sovereign digital currency.
• The technical interoperability specifications for cross-border settlement standards represent a higher dimension of competition. Once an international consensus is formed, it can directly enhance the international status of the renminbi and even break the dollar-dominated cross-border payment system. The digital renminbi has been quietly laying out its groundwork.
• Multilateral central bank digital currency bridge (mBridge): has realized cross-border trade settlement between China, Hong Kong, Thailand, and the UAE, reducing the time from several days to several minutes and significantly lowering costs.
• Pilot programs in surrounding countries: support for small payments with the digital renminbi, facilitating remittances and tourism for Chinese nationals.
• Domestic scene expansion: from supermarket shopping to public transportation, user habits are gradually being formed. This 'application first, rules follow' model is more solid than the European and American approach of purely relying on legislation to seize rule-making power.
As more and more countries adopt the digital renminbi, they will naturally follow China's standards—this is the real solid discourse power.
Three, short-term discourse power yields to long-term security: China's pace is 'steady and steady'. The global digital currency rules are still in the early stages of contention, and no one has a guaranteed victory. China refuses to 'compromise financial security for short-term gains'.
1. Risk prevention takes priority over seizing opportunities. • If we were to forcibly open up private stablecoins in an attempt to catch up with Europe and the United States, once there is a decoupling, collapse, or capital outflow, it would: • Harm the interests of ordinary investors; • Weaken financial credibility; • Undermine the foundation of financial stability. First ban them to cut off risk sources; then concentrate resources on promoting the digital renminbi—this approach may seem slow, but it is actually steady.
2. Financial reform needs to focus on core tasks. Currently, the Chinese financial system faces:
• Real estate risks.
• Local debt pressure.
• The reform of small and medium-sized financial institutions is the 'main battlefield' related to national finance and people's livelihood.
If we scatter our energy on regulating stablecoins, we may end up neglecting other areas, leading to compounded risks.
3. The influence of rules lies in 'adaptability' rather than 'first-mover advantage'.
• The European and American model is suitable for countries with open capital and mature finance. However, the majority of emerging markets (such as Southeast Asia, Latin America, Africa) are similar to China: valuing monetary sovereignty + implementing capital controls.
• The 'sovereign controllable digital currency solution' provided by the digital renminbi better meets the needs of these countries. In the future, this differentiated path will form a unique rule-making influence—more lasting and broader than merely grabbing the private stablecoin rule-making power.
Conclusion: A precise strategic trade-off. China's ban on private stablecoins is by no means a relinquishment of global digital currency rule-making power, but rather a well-considered strategic choice.
✅ Abandon: the private stablecoin track that contradicts its own financial system and has uncontrollable risks.
✅ Focus: A higher-level and more aligned national interest sovereign digital currency track.
✅ Goal: To compete for the truly core value global rule-making power through the digital renminbi. Financial security is always the top priority.
First, maintain the bottom line, then gradually advance—this may seem conservative, but it is actually the most rational choice that aligns with China's national conditions. In the future, as the scope of the digital renminbi expands, China's discourse power in the global digital currency field will naturally follow. This kind of rule-making power gained through institutional advantages and technological strength is the most reliable and lasting. Future outlook:
The global digital currency landscape is still evolving. The promotion progress of the digital renminbi and the regulatory policy adjustments of various countries will continue to affect the direction of rule-making contention.
But no matter how things change, maintaining the bottom line of financial security + choosing the right track that fits oneself will always be the core key.
