Seeds of Wisdom RV and Economic Updates Thursday Afternoon 8-21-25
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BRICS News: China Considers Yuan-Backed Stablecoins to Expand Global Reach
China is preparing for a major shift in its digital asset policy, with plans to introduce yuan-backed stablecoins aimed at boosting the yuan’s role in global trade and payments.
Key points:
China may approve a yuan-backed stablecoin plan this month, led by Hong Kong and Shanghai.
This would be a reversal from China’s 2021 ban on cryptocurrency trading and mining.
Experts say Hong Kong dollar stablecoins could connect the digital yuan (e-CNY) with global assets.
The initiative comes as U.S. dollar stablecoins dominate, accounting for more than 99% of the global supply.
China’s stablecoin push:
The State Council is expected to review a plan that would expand the yuan’s global use, signaling a direct challenge to U.S. dominance in the stablecoin sector.
The move aligns with China’s long-standing ambition to have the yuan rival the dollar and euro. However, experts warn that capital controls and trade surpluses could limit the effectiveness of yuan-backed stablecoins.
Chinese tech giants JD.com and Ant Group have previously lobbied the central bank for approval of such tokens.
U.S. sets the benchmark:
Dollar-backed stablecoins dominate the market, supported by the GENIUS Act, signed into law by President Trump.
The GENIUS Act provides a comprehensive regulatory framework for stablecoins, further entrenching the dollar’s role in global digital finance.
Hong Kong and Shanghai take the lead:
Shanghai is building an international hub for the digital yuan, while Hong Kong’s new stablecoin law, effective August 1, positions the city as a regulatory pioneer.
Morgan Stanley notes that Hong Kong dollar stablecoins could act as a bridge, enabling investors to convert USDT/USDC into e-CNY for cross-border investments, while still respecting China’s capital restrictions.
However, Hong Kong regulators have cautioned that new rules have increased fraud risks, with some firms experiencing volatile market reactions after the law took effect.
Looking ahead:
China may use the upcoming Shanghai Cooperation Organisation (SCO) Summit to discuss expanding the yuan and stablecoin use in cross-border trade.
Other Asian markets, including South Korea and Japan, are also developing their own stablecoin frameworks.
If successful, China’s yuan-backed stablecoins could mark a decisive step toward challenging the dominance of U.S. dollar-linked digital assets.
@ Newshounds News™
Source: Coinpedia
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