China’s Tech Giants Push for Yuan Stablecoin to Challenge USDT

JD.com and Ant Group are lobbying the People's Bank of China to authorize a yuan-based stablecoin in Hong Kong, aiming to reduce reliance on US dollar-backed digital currencies. Both companies plan to issue Hong Kong dollar-backed stablecoins when new regulations take effect on August 1, but argue that a yuan-pegged version is essential for promoting the yuan's international use.

Currently, over 99% of stablecoins are tied to the US dollar, with Tether's USDT holding a 68.2% market share. Chinese exporters increasingly use USDT for international payments, bypassing currency risks and capital controls.

Despite China's 2021 ban on cryptocurrencies, policymakers are showing interest in stablecoins for cross-border payments. Hong Kong's upcoming Stablecoin Ordinance provides a regulatory framework, allowing companies like JD.com and Ant Group to apply for licenses.

If approved, a yuan-pegged stablecoin could mark a significant shift in China's approach to digital assets and enhance the yuan's role in global finance.