Mainland China, one of the world’s most crypto-restrictive countries, is showing signs of softening its stance on stablecoins. Recent developments in Shanghai suggest local authorities are acknowledging the global momentum behind digital currencies, despite Beijing’s continued nationwide ban on crypto trading.
Shanghai Officials Explore Stablecoin Strategy
The Shanghai State-owned Assets Supervision and Administration Commission (SASAC) recently held a key meeting to discuss digital currencies and potential responses to stablecoin adoption. According to a Reuters report, SASAC director He Qing urged heightened awareness of emerging technologies and deeper research into digital currencies. This marked a notable shift in tone, indicating growing interest at the local government level.
This move reportedly aligns with increasing pressure from Chinese experts and major companies calling for the development of a yuan-pegged stablecoin. The proposal highlights an internal push for innovation, even in the face of national restrictions.
China’s Central Bank Signals Openness
The People’s Bank of China (PBOC), the country’s central bank, has also addressed the global rise of stablecoins, especially those like Circle’s USDC, which reinforce the dominance of the US dollar. In June, PBOC Governor Pan Gongsheng acknowledged the transformative potential of stablecoins and similar emerging technologies in cross-border payment systems.
Soon after, China’s state-owned publication Securities Times published an article urging the country to accelerate its stablecoin efforts, stating development should happen “sooner rather than later.”
PBOC adviser Huang Yiping added further support by suggesting Hong Kong could serve as a testing ground for a yuan-backed stablecoin. He cited the city’s offshore renminbi market and greater financial flexibility compared to the mainland, where strict capital controls would make such experimentation difficult.
Whispers of Hidden Bitcoin Holdings
Despite the ongoing crypto ban, speculation continues over whether China is secretly accumulating Bitcoin. Several reports suggest that the country could be the second-largest holder of Bitcoin after the United States, although the Chinese government has never officially disclosed its crypto reserves.
This fuels debate within the crypto community, with some predicting that China could gradually reverse its stance. Others, however, argue that Beijing will likely remain firm, unwilling to expose its population to what it sees as a high-risk financial sector.
FTX Controversy Sparks Further Interest
Interest in China’s evolving crypto stance has been further intensified by the FTX bankruptcy proceedings. In early July, the FTX estate sought permission from a US bankruptcy judge to freeze payouts to creditors in countries with legal uncertainties, including China. Chinese creditors reportedly represent 82 per cent of the affected claims.
This move triggered backlash, particularly as holding cryptocurrency is not technically banned in China. On Tuesday, a Chinese creditor formally objected to the FTX motion on behalf of at least 300 individuals attempting to recover funds from the failed exchange. A court ruling is expected by 22 July.
A Calculated Shift or a Mere Experiment?
While these signals from Shanghai and Beijing hint at a cautious shift in perspective, many experts warn against over-interpreting them as a reversal of policy. The central government has given no indication of relaxing its 2021 crypto crackdown. Still, developments such as a stablecoin pilot in Hong Kong could allow China to test the waters without fully lifting domestic restrictions.
The coming months may clarify whether China’s recent actions represent genuine openness to digital currency innovation or simply a strategic move to keep pace with global trends without losing regulatory control.
