In a dramatic departure from China’s hardline cryptocurrency stance, Shanghai regulators have begun exploring strategic responses to stablecoins and digital currencies, marking the first significant policy shift since the mainland’s comprehensive crypto ban in 2021.
The Shanghai State-owned Assets Supervision and Administration Commission (SASAC) convened a high-level meeting last week with 60-70 government officials to discuss blockchain-based payment systems and their potential applications in state-owned enterprises.
The gathering itself represents a watershed moment for China’s digital asset policy, with He Qing, the regulator’s director, emphasizing the need for “greater sensitivity to emerging technologies and enhanced research into digital currencies.”
Global Crypto Pressure
This marked change in tone comes as major Chinese companies and policy experts increasingly advocate for yuan-pegged stablecoins to counter the growing dominance of US dollar-linked cryptocurrencies in global markets.
The Shanghai meeting focused on practical applications of blockchain technology in cross-border trade, supply chain finance, and asset tokenization—areas where stablecoins could potentially revolutionize traditional financial processes.
Shanghai’s emergence as the testing ground for this policy evolution is particularly significant given the city’s status as China’s primary international financial hub and its historical role in pioneering regulatory changes.
The development aligns with broader governmental recognition that China’s robust fintech ecosystem positions it as a potential key player in shaping the future of blockchain-based payments, despite the current regulatory restrictions.
Yuan Stablecoin Momentum
The policy exploration also coincides with mounting pressure from China’s corporate sector, with e-commerce giant JD.com and fintech powerhouse Ant Group leading calls for yuan-based stablecoin authorization.
These companies are strategically positioning themselves to capitalize on Hong Kong’s new stablecoin legislation, which takes effect August 1, as a pathway to introduce yuan-pegged digital currencies to international markets.
The corporate enthusiasm reflects broader market dynamics, with global stablecoin transaction values reaching $15.6 trillion last year according to ARK Investment Management estimates—surpassing Visa’s transaction volume. This explosive growth has captured the attention of major international companies, with Amazon and Walmart exploring stablecoin launches in more developed regulatory environments like the United States.
Yang Tao, deputy director of the National Institution for Finance and Development, has proposed a dual-track approach for yuan-based stablecoin development, suggesting simultaneous exploration in Shanghai’s Pilot Free Trade Zone and Hong Kong. This strategy would leverage Hong Kong’s favorable regulatory environment while maintaining mainland oversight and control.
However, significant hurdles remain for any comprehensive stablecoin implementation in China. The country’s capital controls present fundamental challenges to stablecoin development, requiring careful navigation to maintain monetary policy effectiveness.
Central bank governor Pan Gongsheng acknowledged last month that the boom in digital currencies and stablecoins poses substantial challenges to financial regulation, indicating continued caution at the highest policy levels.
Hong Kong’s role as a testing ground for Chinese stablecoin policy has gained particular importance, with the city receiving Beijing’s tacit approval to develop into a digital asset hub. As global stablecoin adoption accelerates, China’s strategic response could significantly influence the future landscape of international digital payments and currency competition.