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Has China halted stablecoins?

Recently, discussions around the regulation and development path of stablecoins have intensified among the domestic industrial, policy, and academic circles. Former Deputy Governor of the People's Bank of China, Wang Yongli, publicly stated that China should be wary of the risks associated with stablecoins, emphasizing that "it is not advisable to vigorously develop stablecoins linked to fiat currencies" (see Wang Yongli | Why has China resolutely halted stablecoins?). His views have attracted attention within the industry. In today's rapidly evolving global digital currency landscape, understanding stablecoins solely from a risk prevention perspective may cause us to miss critical strategic opportunities. Considering the spirit of the recent coordination meeting on virtual currency among thirteen ministries and related policy logic, China's approach to stablecoins may require a more comprehensive, flexible, and forward-looking perspective. 1. The space for developing non-dollar stablecoins: Focus on ecology, where China still has advantages. Wang Yongli believes that the stablecoin market is dominated by dollar stablecoins, limiting the space for non-dollar stablecoins. However, this judgment overlooks the "ecological attributes" of stablecoins. The value of stablecoins lies not only in their stability anchored to a certain fiat currency but also in the payment scenarios, financial infrastructure, and business ecosystems they rely on. China has the most complete manufacturing supply chain, the largest e-commerce network, and leading mobile payment penetration rates globally. In areas such as cross-border trade settlement, supply chain finance, and cross-border e-commerce payments, if a stablecoin anchored to the renminbi, supported by China's business ecosystem, is formed, it could open up a new path distinct from the dollar system. Especially along the "Belt and Road" and within the Regional Comprehensive Economic Partnership (RCEP) region, there is a strong demand for efficient, low-cost digital payment tools in physical trade, which provides fertile ground for renminbi stablecoins. Rather than saying "the space is limited," it is more accurate to say that the key lies in whether we can transform China's advantages in the real economy network into advantages in the digital currency ecosystem. To abandon exploration solely because dollar stablecoins currently lead in market share would be akin to willingly ceding the future potential for establishing digital financial rules. 2. The path of stablecoin legislation in the U.S.: Many problems exist, but competition has already begun overseas. Wang Yongli believes that U.S. stablecoin legislation still faces numerous challenges and issues. Indeed, the U.S. is currently at the forefront of stablecoin legislation, with regulatory frameworks at both state and federal levels gradually taking shape; however, the legislative process has exposed many problems, including fragmented regulatory jurisdictions, high compliance costs, conflicts with the existing banking system, and unclear balances between consumer protection and systemic risks. It is rational for China to observe and let the U.S. pave the way while learning from its trial-and-error experiences. But this does not mean we should merely watch the changes. The competition for stablecoins is fundamentally a global market competition, especially in overseas markets and offshore scenarios, where the acceptance of different stablecoins depends on their convenience, trustworthiness, and ecological cooperation. China can support Chinese institutions in issuing and applying stablecoins anchored to the renminbi or other baskets of currencies in overseas markets that comply with local legal frameworks, engaging in market competition with internationally mainstream stablecoins, without opening the domestic market for now. For example, in financial centers like Hong Kong, Singapore, and the Middle East, promoting the compliant application testing of renminbi stablecoins in trade financing, asset transactions, and other scenarios can help accumulate experience and user bases. 3. The backlash risk of legislation: The mainland pauses, Hong Kong takes the lead, creating a layout that allows for both advancement and retreat. Wang Yongli believes that stablecoin legislation may seriously backfire against stablecoins. The underlying implication may be that once China legislates stablecoins, it may instead foster their chaotic expansion and even impact the existing monetary system. While this concern has some validity, completely avoiding regulation and innovation is not a wise strategy. China's strategic choices have already shown flexibility: the mainland adopts a cautious attitude towards private stablecoins and has not yet opened related businesses, while Hong Kong actively promotes the establishment of a regulatory framework for stablecoin issuance, attempting to issue a "Hong Kong dollar stablecoin" and exploring digital asset trading. This differentiated arrangement under "one country, two systems" precisely creates an experimental field where both advancement and retreat are possible. Hong Kong, as an international financial center with sound rule of law and free flow of funds, conducting regulatory sandbox experiments for stablecoins can accumulate regulatory experience while controlling risks from spreading to the mainland. If the experiment is successful, it can serve as a reference for the mainland; if significant risks arise, it will not affect the financial stability of the mainland. Therefore, the concern that legislation may "backfire" could underestimate China's flexibility in institutional design and risk management capabilities. 4. To follow or not? Stablecoins do not belong to any country; ecology determines ownership. Wang Yongli's view that "China should not follow the U.S. path for stablecoins" carries an underlying premise: that stablecoins have strong American attributes. In reality, stablecoins, as technology-driven financial tools, are largely defined by their issuing entities, usage scenarios, and governance structures. Even dollar stablecoins, if issued by non-U.S. institutions and forming ecosystems in specific regions, will have their benefits and influence diverted accordingly. In other words, "whoever issues the stablecoin owns the ecosystem." For example, if an Asian financial institution issues a dollar stablecoin and widely uses it in intra-Asian trade, that stablecoin will serve the regional economic cycle more than it will necessarily reinforce U.S. monetary hegemony. For China, the key is not whether to "follow" or "not follow" the path of a certain country, but whether it can create an autonomous, controllable stablecoin product and ecosystem that aligns with international rules based on its own needs and development phase. For instance, the digital renminbi (e-CNY), as a legal digital currency, is primarily positioned for domestic retail payments and cross-border pilot projects; whereas renminbi stablecoins could focus on cross-border wholesale, offshore markets, and specific business scenarios, with both forming a complementary rather than substitutive relationship. Of course, the specific development model can continue to be discussed. 5. Not doing so might also come at a cost? Leaving strategic space in global competition. In the era of global competition, financial discourse power and the dominance of payment infrastructure are closely linked. If China completely withdraws from the rapidly growing stablecoin sector, it may lead to several consequences: first, the cross-border payment system could become increasingly reliant on dollar stablecoins, deepening the "path dependency" of the renminbi in the digital domain; second, missing the opportunity to export Chinese technological standards and business rules through the digital currency ecosystem; and third, falling into a passive position in future global digital currency rule-making. Therefore, a more balanced strategy is to leave appropriate development space for digital renminbi, dollar stablecoins, and renminbi stablecoins. The digital renminbi, as a digital form of legal currency, should be steadily advanced, especially in international cooperation projects such as the cross-border payment "currency bridge" (mBridge) to accumulate experience. As for renminbi stablecoins, they could be allowed to pilot in offshore markets and specific trade scenarios under controllable risks, forming synergy with the digital renminbi. 6. Halt or strategic risk management? Mr. Wang Yongli's warning about the risks of stablecoins holds significant value, especially concerning financial security and monetary sovereignty. However, in the rapidly changing digital financial competition, emphasizing risks while neglecting strategic opportunities may cause China to lose initiative in the next round of financial infrastructure transformation. The establishment of the coordination mechanism for virtual currency among thirteen ministries itself indicates that China is attempting to respond to the challenges and opportunities brought by digital currencies in a more systematic and coordinated manner. The next step should perhaps be to form a more forward-looking stablecoin development strategy based on this: clearly distinguishing between domestic and overseas, onshore and offshore policies, strictly controlling private stablecoins domestically, and encouraging compliant innovation internationally. Supporting Hong Kong to become an international center for digital asset and stablecoin innovation, while strengthening regulatory collaboration and experience sharing with it. Encouraging enterprises to pilot renminbi stablecoins overseas based on real trade scenarios, gradually building the ecosystem. Enhancing international cooperation, actively participating in the formulation of international stablecoin regulatory standards, and promoting the establishment of a diversified global digital currency system. Time passes relentlessly; one cannot step into the same river twice. While preventing risks, exploring the strategic value of stablecoins with greater wisdom and courage may be the key for China to maintain competitiveness in the digital financial era. Wang Yongli's explanation serves as an important reminder, but the narrative of China's stablecoin story may require a broader scope.