7-8-2025 – China plans to allow the launch of its first stablecoins in a bid to internationalize the renminbi and compete against the US dollar, according to a Financial Times report. Testing of the coins will begin in Hong Kong.

The move represents a significant shift in Beijing’s cryptocurrency strategy, as the country maintains its blanket ban on crypto trading and mining while exploring stablecoins as a strategic tool. Hong Kong regulators recently passed a law allowing licensed businesses to issue tokens backed by any fiat currency, creating the regulatory framework for yuan-denominated stablecoins to operate within China’s controlled financial ecosystem.

Officials are worried that this very move could backfire by triggering capital flight, highlighting the delicate balance China faces in challenging dollar-pegged stablecoins like USDT and USDC that currently dominate global crypto markets. The initial focus will be on enterprise use, with limited licenses rather than widespread public adoption.

The initiative comes as Chinese officials worry that the U.S.’s decision to embrace stablecoins through recent legislation might reverse the trend of de-dollarization, prompting Beijing to accelerate its own digital currency ambitions.