Alibaba JD.com Urge China to Approve Yuan Stablecoins to Counter US Dollar Dominance

Chinese tech giants Alibaba and JD.com are urging the People’s Bank of China to approve yuan-based stablecoins. This move is aimed at countering the dominance of the U.S. dollar in the global stablecoin market, which is valued at $247 billion. The companies propose launching an offshore yuan in Hong Kong to accelerate the yuan’s internationalization and enhance its efficiency in cross-border commerce.

The lobbying effort comes as Hong Kong’s comprehensive stablecoin regulations are set to take effect on August 1, 2025. These regulations will establish one of the world’s most rigorous frameworks for digital currency issuance, requiring full reserve backing with high-quality liquid assets and segregated from the issuer’s funds. The minimum capital requirements are HKD 25 million or 1% of the total issuance, whichever is greater, with redemption at par within one business day under normal conditions.

Both Alibaba and JD.com already plan to issue Hong Kong dollar-backed stablecoins. However, they argue that offshore yuan tokens are urgently needed as strategic tools for cross-border commerce. The yuan’s share of global payments has dropped to 2.89% in May, its lowest in nearly two years, while the dollar commands 48.46% market share through SWIFT payment systems. The global expansion of U.S. dollar stablecoins is posing fresh challenges to yuan internationalization, according to Wang Yongli, former vice head of Bank of China and co-chairman of Digital China Information Service Group.

This push marks a strategic shift from China’s 2021 crypto ban. It comes at a time when the global stablecoin market is projected to reach $2 trillion by 2028, driven by anticipated U.S. regulatory clarity and institutional adoption. Hong Kong has emerged as a testing ground for digital currencies, with JD.com’s subsidiary, Jingdong Coinlink Technology, already entering the Hong Kong Monetary Authority’s stablecoin sandbox. The company completed second-phase testing for its blockchain-based stablecoin, pegged 1:1 to fiat currencies, including the Hong Kong dollar and the U.S. dollar.

Similarly, Ant Group’s Singapore-based international unit also plans to file for Hong Kong stablecoin licenses immediately after the August 1 regulations take effect. The company is also pursuing licenses in Singapore and Luxembourg, anchoring its digital currency ambitions in key global financial hubs. This regulatory clarity is crucial as Hong Kong banks processed HK$17.2 billion in digital asset transactions during 2024, with HK$5.1 billion under custody by year-end. Ten digital asset trading platforms have secured licenses, with eight more applications under review by the Securities and Futures Commission.

Chinese exporters are increasingly using dollar-pegged stablecoins as overseas merchants send payments in USDT. Capital controls, geopolitical tensions, and currency volatility in emerging markets have spurred this shift among Chinese businesses. The trend further shows the growing adoption of dollar stablecoins for cross-border commerce, despite China’s domestic crypto restrictions. JD.com proposed that China allow yuan stablecoin issuance in Hong Kong before expanding pilots to offshore markets within China’s free trade zones. The company argued that Hong Kong dollar stablecoins fail to promote yuan usage since they’re pegged to U.S. dollars.

Recognizing the challenges that dollar stablecoins pose to Chinese financial regulation, many high officials are considering the possibility of a yuan-pegged stablecoin. The timing adds urgency to China’s considerations as the GENUIS Act is close to legitimizing dollar-pegged cryptocurrencies. As it stands now, Beijing is evaluating strategic responses to maintain monetary sovereignty amid the growing threat of the dollar’s dominance.