JD.com Ant Group Push for Yuan Stablecoin to Counter USDT Dominance

China's leading technology firms, JD.com and Ant Group, are actively advocating for the central bank to approve the issuance of yuan-based stablecoins. This move is aimed at countering the dominance of USDT, the most widely used stablecoin globally. The push for a yuan stablecoin comes as Chinese economists and officials are increasingly open to the idea of embracing stablecoins, particularly in light of recent regulatory developments in the United States.

The central bank of China, the People's Bank of China (PBOC), has signaled a willingness to consider yuan-linked stablecoins. This shift in stance is significant, as it indicates a potential change in the regulatory environment for digital currencies in China. The PBOC's openness to stablecoins is likely driven by the growing influence of USDT and other stablecoins in the global financial system, as well as the potential benefits that stablecoins could bring to China's economy.

JD.com and Ant Group are reportedly in talks with the PBOC, calling for the approval of a yuan-pegged stablecoin outside the mainland. Both companies already have plans to issue HKD-backed stablecoins once Hong Kong’s new crypto rules kick in on August 1. However, they argue that an offshore yuan stablecoin is needed urgently to support the currency’s global use, especially as dollar-backed digital assets continue to dominate.

The dominance of USDT in the stablecoin space is undeniable. Over 99% of all stablecoins in circulation are backed by the U.S. dollar. Chinese exporters are already shifting toward USDT for international payments, sidestepping currency risk and capital controls. This trend poses fresh challenges to yuan internationalization, as the yuan’s share in global payments has been declining.

China has long aimed to make the yuan a strong global currency, but capital controls, policy roadblocks, and its ban on crypto in 2021 have held it back. The push for a yuan stablecoin is part of a broader trend of de-dollarization, where countries seek to reduce their reliance on the US dollar in international trade and finance. Stablecoins offer a stable and efficient means of conducting transactions and storing value, making them an attractive alternative to traditional fiat currencies.

The development of a yuan stablecoin could have significant implications for the global financial system. It would provide a stable and efficient means of conducting transactions in yuan, potentially increasing the use of the currency in international trade and finance. This could help to reduce China's reliance on the US dollar and increase the internationalization of the yuan.

However, the development of a yuan stablecoin also presents challenges. Ensuring the stability of the stablecoin's value is crucial, as fluctuations in the value of the fiat currency could lead to instability in the financial system. Additionally, the security and transparency of the stablecoin must be ensured to build trust among users and prevent cybercrime.

The push for a yuan stablecoin is clearly about protecting China’s role in the future of global finance. If Beijing allows a yuan stablecoin to launch in Hong Kong, it could mark a shift in how China approaches digital assets and open the door to broader use of the yuan in cross-border trade. With the U.S. leading the digital dollar movement, China’s window to act is narrowing, and the stablecoin race is on.