China’s financial capital, Shanghai, hosted a landmark meeting on July 10, 2025, that could reshape the country’s stance on digital currencies. Officials from Shanghai’s State-owned Assets Supervision and Administration Commission (SASAC) gathered with policy experts, financial regulators, and scholars to discuss potential frameworks for stablecoins and cryptocurrencies. This gathering signaled a dramatic shift from China’s long-standing prohibition of crypto-related activity and opened a new chapter in the national discussion on digital asset policy.
A Strategic Meeting With Powerful Implications
SASAC brought together 60 to 70 attendees, including regulators, state enterprise representatives, and economic scholars. The purpose of the meeting focused on understanding how digital assets, especially stablecoins, could function within China’s regulated financial environment. Unlike earlier positions where crypto represented a threat, officials in this meeting expressed curiosity, concern, and openness.
He Qing, SASAC’s director, addressed the assembly with a clear message. He urged regulators to understand the “sensitivity and trajectory” of emerging technologies like stablecoins. His message emphasized the need for proactive research, structured experimentation, and policy development. The meeting’s tone leaned more toward strategy and innovation rather than restriction or control.
The inclusion of securities analysts from state-linked firms like Guotai Haitong Securities underscored the government’s intent. These experts presented analysis on stablecoin mechanisms, international use cases, and potential regulatory models. The regulators listened closely, knowing this discussion held deep implications for China’s economic future.
The Case for Stablecoins
While China maintains a ban on cryptocurrencies like Bitcoin and Ethereum, regulators view stablecoins differently. Stablecoins tie their value to a fiat currency, often the U.S. dollar or euro. These assets offer speed, stability, and low-cost cross-border transactions.
Chinese regulators now recognize the rising use of U.S. dollar stablecoins, such as USDT and USDC, in global trade. Chinese exporters already use these tokens to receive payments faster and bypass currency conversion delays. These use cases have gained traction in recent years, especially in peer-to-peer trade, e-commerce, and international logistics.
Officials now understand that banning these tools does not eliminate their use. Instead, the ban drives stablecoin activity underground or offshore. Recognizing this, some officials want to develop yuan-pegged stablecoins to serve as safe, government-monitored alternatives.
Technology Giants Take the Lead
Major Chinese tech companies have pushed for the creation of yuan-backed stablecoins. JD.com and Ant Group lead this movement. These firms see stablecoins as essential tools to streamline payments, facilitate cross-border e-commerce, and integrate smart contracts into supply chains.
JD.com plans to use stablecoins for trade finance, customs payments, and vendor settlements. Ant Group wants to use them to expand its payment services and tap into decentralized finance structures while earning transaction fees.
Both companies plan to apply for stablecoin licenses under Hong Kong’s new regulatory framework, set to launch on August 1, 2025. This strategy allows them to issue yuan-backed stablecoins offshore while avoiding legal conflicts within mainland China.
The Hong Kong Factor
Hong Kong’s Financial Services and Treasury Bureau finalized its stablecoin licensing framework earlier this year. The region will begin accepting applications from qualified institutions starting in August. This program aligns with Hong Kong’s ambition to become a major Asian hub for digital finance.
Mainland Chinese firms see Hong Kong as an ideal testing ground. Stablecoins launched in Hong Kong could circulate in free trade zones, among Chinese exporters, or in cross-border B2B transactions. Companies could conduct pilots in a legally permissible environment while giving Beijing enough visibility and control.
This model allows mainland regulators to observe how stablecoins function in controlled environments. If successful, the model could inform future rules for stablecoin adoption in Shanghai or other pilot regions.
Beijing’s Calculated Hesitation
While Shanghai and Hong Kong explore stablecoin possibilities, Beijing’s central authorities remain cautious. Pan Gongsheng, governor of the People’s Bank of China (PBOC), recently warned about the risks of digital assets. He expressed concern over price volatility, misuse in illicit finance, and potential regulatory gaps.
However, not all central policymakers reject stablecoins outright. Huang Yiping, a prominent PBOC advisor, suggested earlier this year that China could study Hong Kong’s experience before making national policy decisions. He encouraged regulators to collect data, assess risks, and stay flexible.
This balanced approach marks a contrast from China’s 2021 crypto crackdown. Regulators now appear more willing to differentiate between high-risk speculative assets and well-regulated financial tools like fiat-backed stablecoins.
Strategic Motivations Behind the Shift
This shift in attitude does not stem from ideology. It stems from urgency. China’s exporters rely increasingly on dollar-pegged stablecoins to conduct business. If this trend continues, the yuan may lose competitiveness in digital trade ecosystems.
By developing yuan-pegged stablecoins, Chinese regulators aim to defend the yuan’s relevance. They also want to challenge the dominance of the U.S. dollar in global digital payments. This goal aligns with Beijing’s broader agenda to internationalize the yuan and reduce dependence on foreign financial systems.
Moreover, stablecoins offer clear efficiency advantages. They settle transactions instantly, reduce costs, and improve cash flow management. These benefits make them attractive to businesses operating in global supply chains, including many Chinese firms.
A New Regulatory Landscape Emerges
The stablecoin meeting in Shanghai indicates that Chinese regulators now plan to explore structured experimentation. Officials may introduce pilot programs in selected regions. These zones could use yuan-backed stablecoins for limited purposes such as customs clearance, export-import settlements, or logistics payments.
Financial regulators could impose strict controls on issuance, reserve management, and compliance. Banks and fintech firms might receive authorization to serve as custodians or transaction validators. The regulatory model may include real-time auditing, transaction tracing, and cross-border cooperation with Hong Kong.
If successful, these pilots could expand into broader use. Shanghai, being the pilot city, may become a national model for digital asset regulation under strict supervision.
Potential Risks and Challenges
Despite the optimism, several risks remain. Stablecoin systems demand advanced cybersecurity, transparent governance, and strong legal frameworks. Mishandling any of these factors could cause financial instability or undermine trust.
Moreover, Western regulators may react critically. If Chinese firms begin using yuan stablecoins to bypass SWIFT systems or sanctions, other governments could impose restrictions or launch competing tools.
Internal opposition may also slow progress. Some hardliners within the PBOC and other ministries still fear that any digital asset loosening could reintroduce the problems that China eliminated in 2021—namely capital flight, fraud, and speculation.
The Road Ahead
China now stands at a crossroads. It can maintain strict bans and lose ground in the evolving world of digital finance. Or it can create a stable, government-backed framework for digital assets that supports both domestic innovation and global competitiveness.
Shanghai’s July 10 meeting planted the seeds for a possible policy evolution. If Hong Kong’s licensing regime performs well, and if companies like JD.com and Ant Group succeed in launching yuan-pegged stablecoins abroad, then mainland regulators may follow with cautious but significant reforms.
In the next few months, all eyes will watch how China balances control with innovation. One thing has become clear: China no longer ignores stablecoins. It studies them, plans for them, and prepares to harness their power.
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