PBOC reassesses stablecoin stance as US digital dollar gains ground

China’s central bank is reassessing stablecoin restrictions as the US advances digital dollar infrastructure, forcing Beijing to choose between capital controls and competitive participation in cross-border settlement. The stakes are institutional market access and the future shape of payment rails outside traditional SWIFT and CIPS networks.

• PBOC Governor Pan Gongsheng acknowledged stablecoins could “revolutionize international finance” and build alternative infrastructure to avoid sanctions weaponization.
• JD.com aims to cut cross-border payment costs by 90% and reduce settlement times to under 10 seconds using stablecoins through Hong Kong licensing.
• Stablecoin supply is forecasted to reach $3.7 trillion by 2030, up from current levels, with US dollars backing most supply and Treasury holdings.

• $3.7T Projected stablecoin supply by 2030 compared to current market levels.
• 90% Target cost reduction for cross-border payments via JD.com stablecoin initiative.
• 10 sec Settlement time target for JD.com stablecoin transactions versus current standards.

China is weighing a strategic reversal on stablecoins as US regulators accelerate digital dollar dominance, forcing Beijing officials to acknowledge that yuan-based alternatives may be necessary to maintain international competitiveness. The People’s Bank of China Governor Pan Gongsheng, speaking at the Lujiazui Forum in June, conceded that stablecoins could reshape cross-border finance while building payment infrastructure insulated from sanctions risk. Hours before that speech, the US Senate passed landmark stablecoin regulation, underscoring Washington’s commitment to cementing dollar settlement through blockchain rails. This convergence has triggered an internal debate within Chinese policymaking circles about whether to maintain the country’s sweeping ban on cryptocurrency activities or pilot yuan-linked versions through Hong Kong as a regulatory sandbox.

Pan Gongsheng Signals PBOC Openness to Stablecoin Infrastructure

The PBOC Governor’s public acknowledgment marks a sharp departure from Beijing’s prior stance treating crypto as an existential threat to capital controls. Pan framed stablecoins not as speculative assets but as payment distribution channels, a reframing that sidesteps the ideological resistance that has blocked digital asset adoption in China for over a decade.

He emphasized the geopolitical dimension: as US sanctions increasingly weaponize Swift and traditional banking channels, alternative settlement networks become strategic infrastructure rather than financial risk.

Former PBOC chief Zhou Xiaochuan, also speaking at the forum, cautioned that dollar-linked stablecoins could accelerate dollarization, pushing other officials to champion yuan-based alternatives instead.

US Treasury Secretary Scott Bessent has amplified the competitive pressure by arguing that stablecoins strengthen rather than undermine dollar dominance because they inherit the trust embedded in US regulatory oversight, a claim that implicitly challenges China’s ability to credibly back its own digital currency.

The contrast with the e-CNY, which has struggled to gain adoption despite state backing, underscores the institutional trust advantage US assets currently hold even in tokenized form.

Hong Kong Positioning as Launchpad for Yuan Stablecoins

Beijing’s strategy centers on Hong Kong, which has already enacted a legal framework for fiat-referenced stablecoins and now hosts license applications from tech giants JD.com and Ant Group. Morgan Stanley Chief China Economist Robin Xing argued that yuan tokenization is not a substitute for existing currency but a competitive necessity to capture settlement flows.

Shen Jianguang, JD.com’s Chief Economist, warned explicitly that China risks strategic irrelevance without entry into stablecoins. JD.com has committed to reducing cross-border payment costs by 90% and settlement times to under 10 seconds through stablecoin rails, positioning Hong Kong as the operational hub for that infrastructure.

Zhejiang China Commodities City Group, which operates the world’s largest wholesale market, has also signaled intent to license a stablecoin, suggesting the initiative has support across both financial and commercial sectors.

The convergence of interest from state-backed entities, major private tech firms, and regional governments indicates that Hong Kong will serve less as an experiment and more as a parallel payment system designed to bypass traditional restrictions.

Dual-Track Strategy Hedges Against SWIFT and mBridge Uncertainty

China’s prior efforts to build alternative payment infrastructure have faced setbacks: the state-backed e-CNY has seen limited adoption, and the cross-border mBridge project faced uncertainty when the Bank for International Settlements withdrew over sanctions-evasion concerns.

Policy experts now advocate a dual-track approach: expand traditional mechanisms like CIPS and currency swaps while using Hong Kong to pilot yuan stablecoins in parallel. Bloomberg Intelligence assessed that Hong Kong’s stablecoin rails could function as Beijing’s alternative to SWIFT, complementing both CIPS and mBridge without replacing them.

This redundancy serves two objectives: it preserves capital controls through traditional channels while creating a compliant offshore outlet for yuan internationalization.

Cornell economist Eswar Prasad, author of The Future of Money, noted that yuan stablecoins will struggle without deeper onshore-offshore market integration, but he argued they may catalyze the regulatory reforms China has resisted for two decades.

The institutional pressure from US digital dollar momentum may inadvertently force Beijing toward the market liberalization that separate policy initiatives could not achieve.

The CCS read. We read this as institutional repositioning, not ideological capitulation: China is not abandoning capital controls but outsourcing them to Hong Kong’s dual-status framework. For stablecoin holders and settlement platforms, this means a new major liquidity pool and use-case corridor opening, but only for yuan-based products. US dollar stablecoin adoption will accelerate as the winning competitive play.

Watch Hong Kong’s license approvals from JD.com and Ant Group, expected before year-end 2026, and whether the PBOC formally announces an international e-CNY center in Shanghai. The licensing timeline will signal whether Beijing moves pilot or production, and determines whether dollar-backed stablecoins maintain settlement dominance or face material competition from a state-backed alternative.