Chinese regulators have moved to tighten control over digital assets, banning the unauthorized issuance of yuan-pegged stablecoins overseas and extending restrictions to real-world token assets linked to the country’s currency.
Key points to remember:
- China has banned unauthorized yuan-linked stablecoins and associated token assets to protect monetary sovereignty.
- Authorities have reaffirmed crypto payment bans while promoting the state-backed digital yuan.
- Japan and Hong Kong are moving toward regulated stablecoin markets, highlighting a regional political divide.
In a joint statement released Friday, the People’s Bank of China (PBOC) and seven government agencies said individuals and companies, domestic or foreign, cannot issue renminbi-linked stablecoins without official approval.
Authorities have argued that these tokens mimic key functions of currency and could threaten monetary sovereignty.
China says yuan stablecoins threaten monetary stability
Stablecoins linked to fiat currencies “perform some of the functions of fiat currencies,” the advisory said, warning that their circulation outside of regulatory oversight could undermine the stability of the yuan.
The rules also target services related to tokenized financial assets, including blockchain-based representations of bonds or stocks.
Foreign entities are prohibited from offering related products to users in China without permission from regulators.
Beijing has reaffirmed its long-standing stance on crypto payments, declaring that assets such as Bitcoin and Ether are not legal tender and that facilitating transactions or related services constitutes illegal activity.
This policy builds on a sweeping ban introduced by the central bank in 2021, which effectively removed cryptocurrency trading and payments from the national financial system.
Winston Ma, a lawyer and former sovereign wealth fund director, said the restrictions applied to both onshore and offshore versions of the renminbi.
The offshore yuan, known as CNH, is designed to provide foreign exchange flexibility while preserving capital controls.
The measures appear to be part of a broader strategy to limit privately issued digital currencies while promoting the state-backed digital yuan.
China has spent several years developing the central bank digital currency e-CNY and recently allowed commercial banks to share interests with users holding digital yuan wallets in a bid to increase its adoption.
Japan and Hong Kong Adopt Stablecoin Regulations as China Tightens Rules
Elsewhere in Asia, policymakers have taken a different path. Japan introduced a legal framework for the issuance of stablecoins in 2023, while Hong Kong plans to start allowing stablecoin issuers this year.
China briefly considered allowing private companies to issue yuan-pegged tokens in 2025, but later halted pilot programs.
Last year, the People’s Bank of China unveiled a framework that will allow commercial banks to pay interest on balances held in yuan digital wallets starting January 1, 2026.
Lu Lei, deputy governor of the People’s Bank of China, said the change would move e-CNY beyond its initial role as a digital version of cash and integrate it into banks’ asset and liability operations.
The global value of stablecoin transactions reached $33 trillion in 2025, an increase of 72% from the previous year, according to Bloomberg data compiled by Artemis Analytics.
USDC became the most widely used stablecoin in terms of trading volume, processing $18.3 trillion, while Tether’s USDT processed $13.3 trillion, despite maintaining its market cap lead at $187 billion.
The increase in activity follows the passage of the GENIUS Act in July 2025, the first comprehensive U.S. regulatory framework for payment stablecoins.
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