Chinese Tech Giants Push for Yuan-Based Stablecoins to Counter USD Dominance

Chinese tech giants JD.com and Ant Group are actively engaging with Chinese regulators to introduce yuan-based stablecoins. The two firms propose that China allow the launch of stablecoins in Hong Kong pegged to its offshore yuan. This move aims to promote the global use of the Chinese currency and counter the growing dominance of dollar-based digital currencies.

In private discussions with the People’s Bank of China, JD.com has emphasized the urgent need for offshore yuan stablecoins to advance the internationalization of the yuan. This perspective is shared by other industry experts. Wang Yongli, co-chairman of Digital China Information Service Group and former vice head of the Bank of China, stated that it would be a strategic risk if cross-border yuan payments are not as efficient as dollar stablecoins. Xiao Feng, chairman of crypto exchange operator HashKey, noted that many Chinese exporters are turning to dollar stablecoins as more overseas merchants are paying in USDT.

Both companies have previously announced plans to issue stablecoins backed by the Hong Kong dollar, taking advantage of new legislation set to take effect on August 1. Ant Group is preparing to apply for stablecoin licenses in Hong Kong, Singapore, and Luxembourg. This move is part of the company’s broader strategy to expand its blockchain-powered cross-border payments network. JD.com recently revealed plans to launch its own Hong Kong dollar-backed stablecoin by the end of this year, aiming to accelerate transaction speeds and reduce costs for international trade participants. The company is also exploring support for other fiat-backed stablecoins, depending on regulatory approvals.

The push for yuan-based stablecoins comes as other financial institutions, such as the Agricultural Bank of China, have decided to avoid stablecoin development. This decision highlights the strategic importance of stablecoins in the digital finance landscape. Additionally, Shenzhen-listed North King has plans for stablecoin wallets, using Hong Kong as a springboard into international fintech markets. This indicates a growing trend in China towards adopting stablecoins as a means to enhance cross-border payments and financial transactions.

The introduction of yuan-based stablecoins could significantly impact the global financial landscape. By promoting the use of the offshore yuan, China aims to challenge the dominance of the U.S. dollar in digital transactions. This move could also help Chinese exporters and businesses by providing a more efficient and cost-effective means of conducting international trade. However, the success of this initiative will depend on regulatory approvals and the ability of Chinese tech giants to navigate the complexities of the global financial system.