China Should Not Follow the U.S. Stablecoin Path

China already holds a global leading position in mobile payments and digital RMB. Promoting a RMB stablecoin domestically offers no advantages, and internationally, it is unlikely to achieve significant growth or influence. China should not follow the path of USD stablecoins, nor should it fully promote both domestic and offshore RMB stablecoin development.

More importantly, cryptocurrencies such as Bitcoin and stablecoins can utilize borderless blockchains and crypto asset trading platforms to enable global 24/7 nonstop trading and clearing. While this greatly improves efficiency, the high degree of anonymity and highly efficient global mobility—combined with the lack of coordinated international regulation—makes it difficult to meet regulatory requirements such as KYC, AML, and FTC. There are clear risks and real-world cases of their use in illegal activities such as money laundering, investment scams, and illegal cross-border fund transfers. With USD stablecoins already dominating the crypto asset trading market, the U.S. holds significant control or influence over major global blockchain networks, crypto asset trading platforms, and the conversion between crypto assets and the dollar. (For example, the U.S. can trace, freeze, and confiscate certain institutions’ and individuals’ crypto asset accounts, and can sanction or even arrest those responsible for certain crypto asset trading platforms.) Under these circumstances, if China were to follow in the footsteps of USD stablecoins to develop a RMB stablecoin, not only would it be difficult to challenge the international status of USD stablecoins, but it could also turn the RMB stablecoin into a vassal of the USD stablecoin. This would impact national tax collection, foreign exchange management, and cross-border capital flows, posing a serious threat to RMB sovereignty, security, and monetary and financial system stability. In the face of an increasingly complex and challenging international environment, China should prioritize national security, remain highly vigilant, and strictly guard against speculation in crypto asset trading, including stablecoins, rather than simply pursuing efficiency improvements and cost reductions. It is necessary to accelerate the improvement of relevant regulatory policies and legal frameworks, focus on key links such as information and capital flows, strengthen information sharing among departments, further enhance monitoring and tracing capabilities, and crack down harshly on illegal crypto asset activities.

Certainly, while resolutely halting stablecoins and cracking down on virtual currency trading and speculation, China must also accelerate the innovative development and widespread domestic and international application of the digital RMB, establishing a leading global position for digital RMB, forging a uniquely Chinese path for digital currency development, and actively exploring the creation of a fair, reasonable, and secure international monetary and financial system.

Based on the above comprehensive considerations, it is not difficult to understand why China has chosen to resolutely curb virtual currencies—including stablecoins—while steadfastly promoting and accelerating the development of the digital RMB.