China Criticizes US Stablecoins, Proposes Local Alternatives

China has voiced concerns over the influence of US dollar-backed stablecoins such as USDT and USDC, highlighting these in policy discussions in Beijing this week.

This development signals China’s strategic intent to potentially curtail US monetary influence by exploring yuan-based stablecoin solutions.

The Chinese Government expressed rising concern over US stablecoins’ growing impact. USDT and USDC were cited in policy discussions as examples threatening China’s monetary authority.

Academic advisors, including Deng Jun and Zhang Shuyu, are influential in shaping these policies. China is considering alternatives like Chinese yuan-based stablecoins to counter the perceived threats from US-backed digital currencies.

US stablecoins’ global expansion is viewed as potentially weakening local currency sovereignty. The Chinese government is reacting by promoting domestic digital currency solutions to maintain financial control. As Deng Jun stated, “Stablecoins like USDT and USDC are a digital dollar shadow system. Their global expansion enhances dollar liquidity and influence. If left unchecked… could erode China’s financial autonomy and deepen worldwide reliance on the dollar.”

This trend could lead to significant regulatory changes worldwide, particularly if China’s influence encourages others to explore similar routes. Historical trends suggest stablecoins often challenge national currencies during periods of economic instability.

Stablecoin bans have previously occurred in China’s crypto governance. Despite bans, cryptocurrencies like Bitcoin thrive through circumventions, reflecting enduring market adaptability similar to past digital currency restrictions.

Experts from Kanalcoin suggest this scenario could foster an environment ripe for financial innovation as countries like China explore alternatives. Stablecoin regulation has consistently been a contentious issue within the financial sector globally.