Emre Yumlu 
China is reportedly considering launching a yuan-backed stablecoin, with an initial rollout expected in Hong Kong and Shanghai. This marks a surprising shift, as Beijing has spent years cracking down on crypto while promoting its central bank digital currency (CBDC), the digital yuan. If realized, this stablecoin initiative could open a new chapter in the global financial system.
China Enters the Stablecoin Race
The move highlights Beijing’s ambition to strengthen the yuan’s role in international finance. Yet, experts warn the path is far from easy. The digital yuan has so far failed to gain traction, largely due to the dominance of Alipay and WeChat Pay in everyday transactions.
Martin Chorzempa from the Peterson Institute believes the most significant use case for a yuan-backed stablecoin could be cross-border payments. “If yuan stablecoins circulate, could this allow people to transfer money in ways they couldn’t through traditional banks?” he asks.
But the main challenge lies in trust. As Chorzempa notes, China is known for its anti-crypto stance. If this new stablecoin comes with the same restrictions and surveillance as the current yuan, it may struggle to compete with the US dollar, which remains far more freely usable.
Dollar Dominance Remains Hard to Break
The market challenges are just as steep. Patrick Tan, CEO of ChainArgos, points out that 98% of all stablecoin transactions are dollar-based. Despite China’s close ties to major crypto exchanges like Binance, OKEx, and Bybit, these platforms overwhelmingly rely on dollar-backed stablecoins.
According to Tan, the issue is structural: “If China wants to make the digital yuan attractive, it must first make the yuan itself attractive. That requires deep political and economic reforms, which under current conditions are extremely difficult.”
A New Front in the Global Contest
Whether China’s stablecoin initiative succeeds or fails, one thing is clear: stablecoins are no longer just part of crypto infrastructure. They have become tools in a larger geopolitical competition over the future of money.
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