China may promote a renminbi stablecoin! A significant policy shift aimed at challenging the dollar hegemony, with Hong Kong as the core pilot.

According to a report by Reuters, the Chinese government is considering the first approval of a stablecoin pegged to the Renminbi, as an important step to promote the internationalization of the Renminbi. If this initiative is implemented, it will mark a significant policy reversal since China completely banned cryptocurrency trading and Mining in 2021, and may create direct competition for the US dollar stablecoin in the fields of cross-border trade and international payments.

State Council Review Roadmap, Hong Kong and Shanghai Lead the Pilot

Sources reveal that the State Council of China will review and possibly approve a strategic roadmap to expand the global use of the renminbi in late August, which includes the launch of a renminbi-backed stablecoin.

Pilot locations: Hong Kong and Shanghai have been identified as the first hubs for implementation.

Application scenarios: cross-border trade settlement, international payments, regional financial cooperation

Time node: This issue is expected to be further discussed at the Shanghai Cooperation Organization summit held in Tianjin from August 31 to September 1.

Hong Kong officially launched the stablecoin issuer licensing system on August 1, providing a regulatory framework for the offshore renminbi stablecoin.

RMB Internationalization Strategy and Competition with the Dollar Stablecoin

(Source: SWIFT)

According to SWIFT data, as of June 2025, the Renminbi ranks sixth in the global payment market, accounting for approximately 2.9%.

However, in the stablecoin market, dollar-backed tokens account for 98% of the market value (approximately $288 billion), creating an overwhelming advantage.

The Governor of the People's Bank of China, Pan Gongsheng, has previously stated that it is necessary to "reduce excessive reliance on a single sovereign currency," and the launch of the RMB stablecoin is a concrete implementation of this strategy.

Potential Challenges: Capital Controls and Regulatory Coordination

Despite the fact that the renminbi stablecoin is expected to enhance cross-border payment efficiency, China's strict capital controls mean that:

Onshore circulation: still subject to quota and bank approval restrictions.

Offshore applications: specific reserve and redemption rules need to be established to ensure transparency and compliance.

Regulatory Division of Labor: The People's Bank of China, the China Securities Regulatory Commission, the China Banking and Insurance Regulatory Commission, and local governments need to coordinate their responsibilities.

As an offshore testing ground, Hong Kong will play a core role in product design, regulatory sandbox, and cross-border settlement.

International and Market Response

Against the backdrop of U.S. President Trump's promotion of stablecoins as a tool for the global influence of the dollar, China's move is seen as a direct response to the hegemony of the dollar stablecoin.

Corporate Participation: Companies such as Ant International have expressed their intention to apply for a Hong Kong stablecoin license.

Market Size: Although some institutions predict that the stablecoin market will reach $2 trillion by 2028, JPMorgan has revised this down to $500 billion, noting that the share for payment purposes is limited.

Technical Route: The Renminbi stablecoin needs to work in coordination with the existing digital Renminbi (e-CNY) pilot project to avoid overlap and resource waste.

Conclusion

China is considering launching a yuan-backed stablecoin, which is not only a significant shift in its crypto policy but also an important piece in the strategy for the internationalization of the yuan. If the pilot is successful, Hong Kong and Shanghai are expected to become the new engines for cross-border payments in yuan, potentially breaking the monopoly of the dollar in the global stablecoin market. However, capital controls, regulatory coordination, and market acceptance will be key factors determining its success or failure.