Chinese regulators have moved to tighten control over digital assets, banning the unauthorized issuance of yuan-pegged stablecoins overseas and extending restrictions to tokenized real-world assets linked to the country’s currency.
Key Takeaways:
- China banned unauthorized yuan-pegged stablecoins and related tokenized assets to protect monetary sovereignty.
- Authorities reaffirmed crypto payment prohibitions while promoting the state-backed digital yuan.
- Japan and Hong Kong are moving toward regulated stablecoin markets, highlighting a regional policy divide.
In a joint statement released Friday, the People’s Bank of China (PBOC) and seven government agencies said individuals and companies, domestic or foreign, may not issue renminbi-linked stablecoins without official approval.
Authorities argued that such tokens mimic key functions of money and could threaten monetary sovereignty.
China Says Yuan Stablecoins Threaten Currency Stability
Stablecoins pegged to fiat currencies “perform some of the functions of fiat currencies,” the notice said, warning that circulation outside regulatory oversight could undermine the stability of the yuan.
The rules also target services tied to tokenized financial assets, including blockchain-based representations of bonds or equities.
Overseas entities are barred from offering related products to users inside China without permission from regulators.
Beijing reaffirmed its longstanding position on crypto payments, stating that assets such as Bitcoin and Ether do not hold legal tender status and that facilitating transactions or related services constitutes illegal activity.
The policy builds on a sweeping prohibition introduced by the central bank in 2021 that effectively removed cryptocurrency trading and payments from the domestic financial system.
Legal scholar and former sovereign wealth fund executive Winston Ma said the restrictions apply to both onshore and offshore versions of the renminbi.
The offshore yuan, known as CNH, is designed for foreign exchange flexibility while preserving capital controls.
The measures appear to fit a broader strategy of limiting privately issued digital currencies while promoting the state-backed digital yuan.
China has spent several years developing the e-CNY central bank digital currency and recently allowed commercial banks to share interest with users holding digital yuan wallets in an effort to increase adoption.
Japan, Hong Kong Embrace Stablecoin Regulation as China Tightens Rules
Elsewhere in Asia, policymakers have taken a different path. Japan introduced a legal framework for stablecoin issuance in 2023, while Hong Kong plans to begin licensing stablecoin issuers this year.
China briefly explored allowing private firms to issue yuan-pegged tokens in 2025, but later halted pilot programs.
Last year, the People’s Bank of China unveiled a framework that will allow commercial banks to pay interest on balances held in digital yuan wallets starting January 1, 2026.
Lu Lei, a deputy governor at the PBOC, said the change would shift the e-CNY beyond its original role as a digital version of cash and integrate it into banks’ asset and liability operations.
Global stablecoin transaction value reached $33 trillion in 2025, marking a 72% increase from the previous year, according to Bloomberg data compiled by Artemis Analytics.
USDC emerged as the most-used stablecoin by transaction volume, processing $18.3 trillion, while Tether’s USDT handled $13.3 trillion, despite maintaining its lead by market capitalization at $187 billion.
The surge in activity followed the passage of the GENIUS Act in July 2025, the first comprehensive U.S. regulatory framework for payment stablecoins.
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