China is quietly laying the groundwork for a state-sanctioned stablecoin ecosystem—one designed to rival the U.S. dollar’s global dominance without triggering the capital flight it fears most.
At the center of the strategy is Hong Kong. The city has begun licensing stablecoin issuers under new legislation, potentially allowing tokens backed by the offshore renminbi (CNH). But while the legal door is cracked open, regulators are keeping a firm grip on the handle.
The Hong Kong Monetary Authority (HKMA) says only a “handful” of licenses will be granted in 2025, and early applications will be confined to closed-loop business-to-business use cases.
“HKMA’s priority is stability and control at launch,” said Paul Tang of the Hong Kong Money Service Operators Association. “Initial programs are expected to focus on B2B applications, limiting their adoption.”
It’s not a free market play. It’s a sandbox—closely monitored and state-aligned.
A Tool of Statecraft, Not Freedom
Beijing’s position is strategic, not ideological. Officials see stablecoins as potential tools to internationalize the renminbi and build alternatives to U.S.-controlled systems like SWIFT. But they remain deeply wary of the technology’s inherent openness.
Top regulators, including People’s Bank of China Governor Pan Gongsheng, have publicly acknowledged that stablecoins are reshaping global payments. And the clearest signal yet of official interest is now emerging from the mainland itself.
In Shanghai, the powerful State-owned Assets Supervision and Administration Commission (Sasac) recently convened a closed-door meeting with major SOEs to explore stablecoin applications in cross-border trade and payments, according to a South China Morning Post report. The meeting—sparked by Hong Kong’s legislative moves—suggests the experiment is already rippling across the border into real-world planning.
Still, the core concern hasn’t changed. Internal discussions consistently return to a single priority: preventing capital outflows.
In other words: stablecoins are fine—as long as they don’t behave like stablecoins.
No, There’s No ‘New’ Crypto Ban
Despite renewed speculation online, China has not issued a fresh crypto ban. Its 2021 rules—banning institutional trading and mining—remain in place. Here’s the actual picture:
- Hong Kong is a testbed, not a workaround. Beijing is deliberately using it to explore regulated digital assets.
- Retail crypto holdings are legal; the 2021 ban targets institutions, not individuals.
- Mining persists in multiple provinces despite official prohibition.
- State actors are increasingly interested in tokenizing real-world assets for trade and finance.
ChainStreet’s Take: Co-Opt, Not Crush
China isn’t trying to kill crypto—it’s trying to cage it.
Beijing’s long game is to build a tightly controlled, renminbi-based stablecoin infrastructure that can one day challenge dollar-backed giants like USDT and USDC. The Sasac meeting confirms this isn’t fringe—it’s moving into the core of China’s economic apparatus.
The real test is whether permissioned digital assets can deliver geopolitical utility without triggering the very instability Beijing fears. The signal to watch? Which state-owned bank gets the first license to issue a digital renminbi stablecoin from Hong Kong.
That’s when the quiet currency war goes live.
