How do Chinese people view stablecoins in China?

The news disclosed by Reuters that “China may consider the issuance of a stablecoin based on the Renminbi” has stirred up waves in the global financial and Crypto Assets markets. The fact that this long-considered policy “taboo” topic can surface is itself sufficient to be interpreted as an important signal of a directional shift.

The sudden discussion is not without reason. From the China National Petroleum Corporation (CNPC) researching the use of stablecoins for cross-border oil settlements, to Hong Kong actively promoting a regulatory sandbox for stablecoins, and to the spontaneous exploration of offshore renminbi stablecoins by the public, all indicate that the narrative of renminbi stablecoins is entering a new and more complex stage. However, in the face of this potential move that could reshape the global financial landscape, the voices within China are not unified; instead, they present a complex picture of official caution, market enthusiasm, and public skepticism.

Optimism and expectation

In the eyes of supporters, the RMB stablecoin carries enormous strategic opportunities. The most direct driving force comes from the challenge to the current dominance of the US dollar stablecoin. As market analysts have said, over 99% of the global stablecoin market is occupied by US dollar stablecoins, and “China's move is clearly an attempt to break this monopoly.” From the severe crackdown on Crypto Assets in 2021 to the current reassessment of stablecoins, this shift is seen as China's strategic awakening to the realization that “the digital currency pie is too big to let the US monopolize.”

This expectation has been echoed on social media. Some Mandarin users described it as a “good thing,” believing that it not only benefits the overall crypto market but also may provide ordinary people with “an additional channel for clean money.” Financial analyst “qinbafrank” pointed out from a more macro perspective that the breakthrough for the renminbi stablecoin is likely to be in “offshore renminbi (CNH).” He emphasized that Hong Kong has an offshore renminbi market scale of nearly one trillion, and with potential pilot projects like the Shanghai Free Trade Zone and Hainan Free Trade Port, it provides a natural soil for the development of renminbi stablecoins.

The specific application scenarios of this strategic vision are gradually becoming clear. China National Petroleum Corporation (CNPC) has revealed that it is researching the feasibility of using stablecoins for cross-border oil payments, which is a strong signal. Traditionally, oil settlement has been dominated by global major currencies. If the renminbi can leverage stablecoins to penetrate this key channel, it will undoubtedly greatly enhance its share in the global payment system (currently accounting for only about 2.88% in SWIFT). This “Digital Silk Road,” serving the “Belt and Road” trade and independent of the SWIFT system, is moving from a grand narrative to the edge of concrete practice.

Prudence and Vigilance

However, beyond the eager market expectations, the warning from Zhou Xiaochuan, the former governor of the People's Bank of China, represents the prudence and calmness of the official decision-making body. In a closed-door seminar, he comprehensively analyzed the potential risks of stablecoins from six dimensions, injecting a dose of sobriety into this wave.

Central Bank Perspective: Preventing Excessive Currency Issuance and High Leverage. Zhou Xiaochuan pointed out that the core risk lies in the issuer possibly “issuing currency excessively” without sufficient reserves, and subsequently generating a “high leverage amplification” multiplier effect through deposit and loan, collateral, and other processes. Once a run occurs, the risk far exceeds the capacity of the reserves. He emphasized that the custody of reserves should be managed by the central bank or its recognized institutions; otherwise, it would be difficult to reassure the public.

Financial service model perspective: a calm judgment on “decentralization” and “tokenization”. He reminds that not all financial assets and service links are suitable for tokenization and decentralization. Taking retail payments as an example, China's mobile payment and digital RMB system have achieved extremely high efficiency. Currently, there is insufficient theoretical basis for “fully replacing account-based payment systems with comprehensive tokenization.”

Payment system perspective: Compliance challenges are severe. Stablecoins must meet stringent compliance requirements such as Know Your Customer (KYC), Anti-Money Laundering (AML), and Counter-Terrorism Financing (CFT), but currently, stablecoin payment services in the market have significant deficiencies in this regard.

Market Trading Perspective: Beware of Market Manipulation and Lack of Investor Protection. The stablecoin market has already seen cases of price manipulation and fraud, but the existing regulatory framework is still insufficient to effectively respond. If unqualified investors are further attracted to enter the market, the risks will be further amplified.

Microscopic behavioral perspective: the boundary between commercial interests and public services. Payment systems have public attributes as infrastructure and should not be completely dominated by profit-driven commercial institutions. It is necessary to be vigilant against stablecoins being excessively used for asset speculation, which could lead to financial instability.

Circulation Path Perspective: Real demand scenarios are key. If there are not enough application scenarios, stablecoins may “not be issued.” If the main route of payment is not smooth, its circulation may overly rely on the speculation of virtual assets, raising concerns about its health.

Zhou Xiaochuan's remarks clearly outline the core concerns of the regulatory authorities: while embracing financial innovation, how to ensure the safety and stability of the national financial system remains an unwavering bottom line.

Doubt and anxiety

Beyond the optimistic strategists and cautious regulators, there exists a third voice - skepticism and concern from the public. These voices mainly appear on overseas social media, but they authentically reflect the deep-seated worries of a segment of the population.

The comment from the user “Zhijiangjinyu” is very representative; he sharply pointed out: “The RMB stablecoin is like China's internal circulation – it will only harvest the Chinese people.” He is worried that once the stablecoin project fails, ordinary users will have no place to complain. A deeper concern is that the reserve assets of the stablecoin may be used to solve local government debt issues, such as bonds included in local government financing platforms (LGFV), “and in the end, it will still be the followers who pay the price.”

This distrust is also reflected in the doubts about the implementation path. Some commentators believe that under strict capital controls, if the RMB stablecoin wants to truly circulate, it will inevitably require strict identity verification, which goes against the anonymity pursued by the crypto world. Others believe that the so-called “RMB stablecoin” may just be another way of saying the international use of the official digital RMB (e-CNY), and it is unlikely that a completely independent stablecoin system will be issued that circulates freely on the public chain.

Conclusion

Integrating various viewpoints, a roadmap outlining the future of the Renminbi stablecoin is gradually emerging. It is no longer a simple “ban” or “release”, but rather a more sophisticated combination of strategies.

First, “offshore first, onshore strictly controlled” will be an insurmountable red line. All effective explorations are concentrated in the offshore renminbi (CNH) field. This ensures that risks are effectively isolated from the financial system in mainland China, preventing it from becoming a “Trojan horse” for capital outflow.

Secondly, the strategy of “openly repairing the plank road while secretly crossing the chasm” may have quietly started. Hong Kong will be the “plank road” that attracts global attention, serving as an officially recognized pilot for limited sandbox testing. The real chess move of the policy may actually lie in the “chasm” along the “Belt and Road” - encouraging compliant teams (such as AnchorX, which has already obtained a license in Kazakhstan) to apply for licenses in friendly countries, serving specific geopolitical economic goals.

Ultimately, the discussion about the RMB stablecoin has moved from behind the scenes to the forefront. It is no longer merely a technical or financial issue, but is intertwined with geopolitical ambitions, considerations of financial stability, desires for market innovation, and the complex emotions of ordinary people. Regardless of how the final policy is implemented, China is clearly cautiously exploring a unique path in this global digital financial transformation that can achieve the “expedition” goals while safeguarding the security “red line.” The whole world is watching with bated breath.