When Washington rolls out the rules for Stablecoin, Beijing’s voice warns it’s time to catch up or take the risks left behind.
Beijing may have finally warmed up to the stubcoin, but without hesitation it is not. Amid signs that China may be rethinking its digital currency strategy, a state media article this week reportedly urged policymakers to focus on “adapting to stablecoins trends.”
This article called on Chinese authorities to begin developing a formerly supportive, ridiculous stable rock, to launch a regulation layout as the US passed the stablecoin bill, and gave regulated publishers a green light to mint their dollar peg digital tokens.
Chinese analysts and officials seem worried that this US head start could deepen the greenback domination in digital trade and is chasing the yuan.
In this article, we discussed Stablecoins as a “new payment tool” that offers the benefits of taking risks, but being too many to ignore. “The development of former support stubcoin should be faster than it would later,” he said, citing a wide range of consensus among industry insiders.
There is no direct competition
That’s exactly where China is concerned. “For China, which is promoting the original global use, actively regulating stubcoins and thus promoting the original internationalization could be a better solution,” Securities Times Peace said.
This article has been added to the surge in voices, particularly in recent months that have urged Beijing to act, especially as trade tensions with Washington continue to escalate.
Liu Xiaochun, assistant director of the Shanghai Financial Research Institute, told the outlet that Yuan-based stubcoin could help China balance innovation and financial security. However, he reportedly stressed that they shouldn’t attempt to “compete directly” with the dollar-supported version. Instead, the focus should be on “supporting emerging economies” and expanding the original use in a more organic way.
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Meanwhile, Hong Kong is already moving forward. We plan to launch a licensing system for Stablecoin publishers in August. However, crypto trading remains banned on the mainland, and regulators have shown little desire to change it any time soon.
In contrast, the US is moving forward. Last week, the Senate passed the Genius Act. This is a bill that sets the basic rules for issuing stablecoins, requiring compliance with reserves and anti-money laundering laws. The vote was passed with bipartisan support, but some Democrats, including Sen. Elizabeth Warren, warned that the bill was too soft against a potential conflict of interest, particularly linked to Trump’s crypto venture.
Concerns are rising
Still, the voices of the industry supported the movement. Christian Catalini, founder of MIT’s CryptoeConomics Lab, told ABC News that by supporting the Genius Act, consumers are seeing real benefits by “opening the lock” for competition and innovation.
Analysts at China International Capital Corporation did not overlook the impact. In this week’s note, they pointed out that most of the stupid things are still pinned in the US dollar. That alone will help strengthen the dollar’s status, they wrote. Reduce costs and facilitate greenback transactions. This will encourage international use of US currency.
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The growing popularity of these digital dollars could even boost global demand for the US Treasury Department, according to the CICC note. But they also flagged potential shortcomings. Geopolitical tensions and rising concerns over US debt levels could ultimately deprive confidence in the dollar. It could probably create openings for other digital currency, including yuan support stablecoin.
Zhou Xiaochuan, former chief of China’s Central Bank, reiterated his concerns at the Lujazzi Forum in Shanghai last week. He warned that the rise of stables could accelerate “dollarization” in parts of the global economy.
Multipolar currency
According to Coingecko, Stablecoins represents a $261 billion market as of the time of reporting. Of these, about 97% have won dollars, with over $1.4 billion being supported by the US Treasury Department.
Zhu Taihui, a senior fellow at the National Financial Development Agency under the Chinese Academy of Social Sciences, told SCMP that offshore Yuan-based stubcoin should be issued in Hong Kong “as soon as possible” and ultimately expanded into China’s free trade zone.
Meanwhile, China is stepping up its efforts in parallel, such as the digital yuan or e-cny. Similarly, the current governor of the central bank, Pan Gongshen, pledged to establish an international operating centre for Shanghai’s currency, reassessing Beijing’s vision of a “multi-pole” global currency system that is less dependent on the dollar.
“Developing a multipolar international monetary system will help strengthen policy constraints in sovereign countries, increase system resilience and improve global financial stability.”
Pangong Shen
However, making the yuan compete globally still faces obstacles. As Morgan Stanley analysts pointed out in their research notes, a meaningful rise in Stablecoins, supported by the original, should be mitigating their development and mitigating the broader acceptance of Chinese currency, given the ban on domestic use, prolonged capital management and the stellar domination of USD pugs, by Beijing’s ban on domestic use and inadequate global perception.
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