The attitude that Bitcoin vs stablecoins in China has towards digital assets has completely changed. Though cryptocurrencies such as Bitcoin are prohibited, the nation is starting to play with stablecoins, especially yuan-backed ones, as a means of limited financial innovation and increased renminbi usage.
China’s Historical Crypto Crackdown
In 2021 China banned cryptocurrency exchanges, trading, and mining, because of its claims of financial instability and risk. Such policies enhanced the supremacy of the digital yuan in China and crypto operations remained under the tight grip of centralization.Wikipedia+1
Stablecoins: A Deeper Dive
Unlike decentralized cryptocurrencies, stablecoins—especially fiat-backed tokens—offer predictable value and regulatory compatibility. For China, they represent:
- A tool to augment cross-border payments with the yuan,
- A safer alternative to volatile cryptocurrencies,
- A way to reclaim digital finance leadership without losing control.
The Regulatory Shift in 2025
Mainland Conservatism – Steady Bans Persist
China continues its hardline prohibition on decentralized crypto assets, keeping Bitcoin and similar tokens out of legal circulation.
Testing via Hong Kong
In contrast, Hong Kong is emerging as a pilot hub:
- A Stablecoin Ordinance, effective August 1, 2025, allows licensed issuers to launch fiat-backed tokens under strict Reserve Ratio, AML, and audit conditions. World Economic ForumAInvest
- Notably, state-owned giants like JD.com and Ant Group are now lobbying to issue yuan-backed stablecoins via Hong Kong to challenge USD dominance. Reuters+1
Strategic Motives in Beijing
Officials—including PBOC Governor Pan Gongsheng—have acknowledged that stablecoins are reshaping global payments and could help steer capital flows optimally within China’s economic framework. Financial TimesCryptoRank
Motivations Behind the Shift
- Maintaining Sovereign Control: Stablecoins allow innovation while preserving oversight.
- Promoting the Renminbi Globally: A yuan-pegged token can enhance international use of China’s currency.
- Avoiding Capital Flight: Stablecoins offer alternatives to opaque channels like USD-backed tokens.
- Staying Competitive: China seeks to keep pace with nations developing regulated digital currencies.
Global Implications
- Bitcoin’s Role in China: Further marginalized in favor of state-aligned financial tools.
- Stablecoin Projects: Potential boom for compliant institutions within legal frameworks.
- Regulatory Signals: The example can be regarded as a role model by other countries in partial re-acceptance of cryptos under the supervision
Criticisms & Concerns
- Fear of surveillance and capital control through stablecoin usage.
- Skepticism over whether regulated stablecoins can counter global dollar dominance or lead the stablecoin race. Reuters
Conclusion
China’s pivot to favoring stablecoins over Bitcoin marks a new chapter in digital finance—one marked by cautious innovation rather than open disruption. Via Hong Kong’s controlled sandbox, the country may be positioning the yuan for a subtle yet impactful role in the crypto economy.