China's Quiet March Toward Stablecoin Adoption

China’s Quiet March Toward Stablecoin Adoption

While the United States moves toward open regulation of stablecoins through legislative efforts such as the GENIUS Act, China is pursuing a more discreet and tightly controlled approach. Despite the nationwide ban on cryptocurrencies, recent developments in Shanghai indicate a cautious willingness to explore stablecoins within a strictly regulated framework.

Emerging Interest Amid Regulatory Caution

Last week, the Shanghai State-owned Assets Supervision and Administration Commission (SASAC), under the leadership of He Qing, held its first public study session dedicated to stablecoins. This closed-door meeting examined how state-owned enterprises might utilize blockchain technology to improve cross-border trade and supply chain management. This event marked the first direct engagement with stablecoins in China’s official regulatory discourse.

He Qing emphasized the importance of deepening research into digital currencies and emerging technologies, signaling a nuanced stance in a country where crypto assets remain prohibited. The discussions focused on asset digitization and supply chain optimization, reflecting a careful balance between fostering innovation and maintaining strict state oversight.

This measured approach coincides with heightened vigilance. Just days before the Shanghai meeting, Shenzhen authorities issued warnings about scams related to stablecoins. According to Sam MacPherson, CEO of Phoenix Labs, this dual posture is deliberate: in China, stablecoins are regarded less as speculative instruments and more as sovereign financial tools.

Strategic Significance and Regional Variations

The strategic importance of stablecoins was underscored by Pan Gongsheng, governor of the People’s Bank of China, who broke official silence at the Lujiazui Forum 2025. Pan acknowledged blockchain’s transformative impact on international payments and cross-border money transfers, stating, “These innovations accelerate the development of central bank digital currencies and stablecoins, and reshape traditional payment and settlement systems.” His remarks highlight Beijing’s recognition of the geopolitical implications tied to digital currency innovation.

China’s approach varies across regions. Hong Kong maintains a relatively open stance toward digital assets, while Shenzhen exercises caution under central government supervision. Shanghai, meanwhile, is quietly experimenting with stablecoin applications. MacPherson describes this as “coordinated experimentation,” enabling China to trial different models without relinquishing control.

This strategy unfolds amid active development of stablecoin infrastructures across Asia’s financial hubs, including South Korea, Singapore, and Hong Kong. Concurrently, Chinese technology giants such as JD.com and Ant Group are lobbying the central bank to authorize yuan-based stablecoins, aiming to counterbalance the growing influence of U.S. dollar-linked cryptocurrencies. The Bank for International Settlements (BIS) has also issued warnings about the risks associated with stablecoins, urging countries to consider tokenizing their own national currencies.

Regulatory and Market Implications

The potential applications of stablecoins have sparked important discussions regarding compliance with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations. On the international stage, Bank of America has identified payments companies like Visa, Mastercard, and PayPal as likely beneficiaries of increased stablecoin adoption.

For now, China is advancing with calculated steps—neither fully embracing nor outright banning stablecoins. The overarching objective remains to maintain stringent control over monetary innovation while positioning the digital yuan at the core of future financial infrastructure. Within this context, stablecoins serve as a testing ground for a discreet yet decisive transformation of China’s financial system.