Stablecoin News – On July 12, 2025, Shanghai’s State-owned Assets Supervision and Administration Commission proposed a yuan-pegged stablecoin pilot in the Shanghai Pilot Free Trade Zone, marking a significant shift in China’s cautious approach to digital currencies despite its 2021 crypto trading ban.
The initiative, discussed in a July 11 meeting with 60–70 officials and experts, aims to counter the dominance of U.S. dollar-pegged stablecoins like USDT and USDC, which hold 90% of the $253 billion stablecoin market.
The pilot, led by Yang Tao of the National Institution for Finance and Development, seeks to integrate yuan-backed stablecoins with China’s digital yuan CBDC, enhancing cross-border trade with Belt and Road countries.
Stablecoins could reduce transaction times to 6–9 seconds, compared to days via traditional systems, supporting China’s $2.7 trillion export market.
The Shanghai regulator’s push reflects growing pressure from tech giants like JD.com and Ant Group, which are preparing yuan-stablecoin applications via Hong Kong’s August 1 licensing regime.
China’s crypto ban complicates implementation, with Shenzhen’s July 7 warning highlighting stablecoin scam risks. The BIS’s June 24 report cautioned that stablecoins could undermine monetary sovereignty, urging robust regulation.
Shanghai’s pilot addresses this through strict reserve requirements and oversight, drawing on Hong Kong’s model, which requires 25 million HKD in capital and high-liquidity assets.
The initiative could position China in the global digital currency race, but regulatory hurdles and U.S. competition, via the GENIUS Act, pose challenges.
The pilot’s success could reshape cross-border payments, particularly in Asia, where stablecoins are gaining traction for remittances and trade.
However, China must balance innovation with its restrictive crypto policies to avoid pushing issuers to jurisdictions like Singapore, which granted DBS a stablecoin license. Shanghai’s move signals a pragmatic approach to digital finance, with global implications.
