For several weeks, a rumour has intrigued financial markets and crypto observers: Beijing is considering authorising the issuance of yuan-denominated stablecoins, but only through Hong Kong. This subtle strategy would allow China to test this innovation while maintaining a regulatory distance. The goal? To offer a credible alternative to dollar-backed stablecoins – which have been booming since the Trump administration’s GENIUS Act – and ultimately pave the way for the internationalisation of the yuan in the digital age.
Key takeaways
- No official pro-crypto shift in China: Beijing maintains a hard line on Bitcoin and cryptocurrencies.
- Hong Kong as a laboratory: the Special Administrative Region (SAR) is being used to test innovative financial policies.
- Stablecoin project: The Bank of China, through its local subsidiary, is reportedly considering applying for a license in Hong Kong.
- Implicit objective: to test the use of a stablecoin under state control, outside the strict continental framework.
A Chinese context remains ambiguous regarding cryptocurrencies
Since 2017, mainland China has maintained a hostile policy toward cryptocurrencies. Bitcoin trading and mining are prohibited, and Beijing continues to denounce the “financial and social risks” associated with digital assets. But this hard line is accompanied by a parallel strategy: developing state-controlled digital currency solutions. The most advanced example is the e-CNY, the People’s Bank of China’s digital yuan, already being tested in several major cities. Hong Kong, on the other hand, enjoys a special status: as a Special Administrative Region (SAR), it has regulatory autonomy allowing it to experiment with initiatives prohibited on the mainland. Beijing is thus using the city as a financial laboratory.
Hong Kong, the new asian hub for stablecoins
On August 1, 2025, Hong Kong implemented a unique regulatory framework called LEAP (Licensing for Electronic Asset Pegging). This law imposes a mandatory license for any stablecoin issuer, the obligation to maintain liquid reserves equivalent to 100% of the tokens in circulation, as well as strict KYC/AML (customer identity and anti-money laundering) controls. This system, hailed as the most advanced in Asia, places the city almost on par with the United States, which currently dominates the sector thanks to the GENIUS Act. Several financial giants quickly expressed interest: Standard Chartered, but also Chinese heavyweights like JD.com and Ant Financial. According to the Hong Kong Economic Journal, the Bank of China could itself submit an application via its local subsidiary. The big question remains: will this future stablecoin be backed by the Hong Kong dollar (HKD) or the yuan (CNY)? This choice is far from trivial: a stablecoin in HKD would strengthen the local financial ecosystem, while a stablecoin in CNY would mark a historic step forward in the internationalisation of the Chinese currency.
A direct response to the dollar and the GENIUS Act
China’s interest in stablecoins cannot be understood without considering the American context. Since 2024, the Trump administration has made stablecoin regulation a priority with its GENIUS Act, a bill that has contributed to a veritable boom in dollar-backed stablecoins. As a result, the global stablecoin market, already valued a 3.8 trillion $, is now more than 95% dominated by USD tokens (USDT, USDC, PYUSD, etc.). For Beijing, this imbalance represents a threat: the more dollar-denominated stablecoins become dominant in international payments, the more the greenback strengthens its dominance at the expense of the yuan. A CNY stablecoin, even limited to Hong Kong, could constitute a tool for monetary counterbalance, offering businesses and investors a credible alternative to the dollar in digital transactions.
Hong Kong, between crypto dynamism and regulatory caution
Hong Kong’s transformation into a crypto hub is nothing new. Back in 2022, the city published its first official policy on digital assets, reaffirmed in 2024 with a clear vision to become a global centre for crypto and decentralised finance. Today, the signs are visible in daily life: crypto exchange counters now welcome customers in shopping malls, hundreds of Bitcoin ATMs line the streets, and international events like the Bitcoin Asia Summit attract high-profile figures – including Eric Trump, who was recently invited as a speaker. But this openness comes with great caution: the Hong Kong Monetary Authority (HKMA) has already indicated that it will only issue a small number of licenses during the first wave, in order to test the system and limit risks. Some players, put off by compliance requirements deemed costly, have decided to adopt a waiting strategy, preferring to observe the first issuers before launching.
What are the challenges for China and the internalisation of the yuan?
The launch of a CNY stablecoin in Hong Kong would have multiple implications.
Financial and Monetary
Diversify the sablecoin offering in the face of the dollar’s hegemony. Offer a practical digital payment tool for international trade. Test the offshore use of the yuan without risking destabilising the mainland economy.
Technological
Accelerate blockchain innovation in China, while maintaining state control. Create synergies with the e-CNY, which remains a domestic project focused on internal payments.
Geopolitical
Strengthen Chinese influence in Asia in the face of US initiatives. Position Hong Kong as a financial bridge between China and the rest of the world. Experiment with a “soft monetary power” strategy by encouraging trading partners to use the digital yuan.
Possible scenarios: what future for this project?
- Rapid adoption and regional success: the Chinese stablecoin, backed by the yuan, is gaining ground in cross-border payments in Asia and is becoming a credible alternative to dollar-denominated stablecoins, particularly for trade with countries participating in the Belt and Road Initiative.
- Limited but strategic success: the stablecoin finds limited use in Hong Kong and a few trade corridors. Beijing uses it primarily as a tool for experimentation and political signalling.
- Stumbling blocks and resistance: regulatory constraints are slowing adoption, international partners remain wary of Chinese state control, and the yuan is struggling to compete with the dollar outside Asia.
Conclusion
Hong Kong is reaffirming its role as China’s financial laboratory. By authorising the issuance of stablecoins, the city is positioning itself at the forefront in Asia, attracting investors, banks, and tech giants. For Beijing, the stakes go beyond a simple technological test: this is a global monetary battle, where the yuan is seeking to establish itself against the dollar. A potential yuan-denominated stablecoin launched from Hong Kong could mark a decisive step in this silent confrontation between Washington and Beijing – and redraw the financial balances of the next decade.
