China Cracks Down on Overseas Yuan Stablecoins Amid Push for Digital Yuan Adoption
- China’s central bank has banned any foreign entities from issuing stablecoins linked to its yuan without express authorization from Chinese authorities.
- The government is also cracking down on tokenized real-world assets, which it says have been “disrupting economic and financial order.”
While the rest of the world rushes to build and approve stablecoins tied to local currencies and to promote the tokenization of real-world assets, China is going in the opposite direction. The country’s central bank has announced a ban on any overseas yuan-linked stablecoin and termed tokenized RWAs as a threat to its economic stability. The new bans were announced in a joint statement between the People’s Bank of China and seven other government agencies, including the Ministry of Public Security and the China Securities Regulatory Commission. PBoC clarified that digital assets like Bitcoin and Ether don’t have legal tender status in China and must not substitute the yuan as currency in payments. China has banned most crypto activities for years, including purging miners from the country, which once controlled over 75% of all BTC hashrate. However, as we reported, the country’s wealthiest individuals have been shifting capital from luxury property to Bitcoin. Exchanging one crypto for another, selling crypto for fiat, providing crypto information, issuing tokens, and trading of financial products tied to crypto remain prohibited, PBoC reiterated. Deploying stablecoins tied to the yuan, even in overseas markets, is also illegal, the top bank added, stating:
“Without approval in accordance with laws and regulations by relevant authorities, no domestic or overseas entity or individual may issue stablecoins pegged to the Renminbi overseas.”
The stablecoin ban is seen as the country’s attempt to protect its digital yuan from competition in the digital payments space. As we reported, it intends to pay interest to holders of the CBDC to boost uptake. China Doubles Down on Crypto Crackdown The PBoC is also cracking the whip on tokenized RWAs. Globally, tokenization has taken off, with experts describing it as the next frontier of blockchain financial services. Some predict it will unlock over $30 trillion within the next few years. However, China is unmoved and views these tokens as disruptive to its economy. The apex bank says tokenization is “disrupting economic and financial order and endangering the property safety of the people.” It added:
“Conducting real-world asset tokenization activities within the territory, as well as providing related intermediary or information technology services…shall be prohibited. Overseas entities and individuals are prohibited from illegally providing real-world asset tokenization-related services to domestic entities in any form.”
Despite the ban in China, tokenization is growing rapidly globally. This week, Ripple announced that Dubai based jeweler Billiton would tokenize AED 1 billion ($280 million) worth of diamonds on XRPL, as CNF detailed. Hedera is working with the Malaysian government on a tokenization project, while the Canton Network is processing $6 trillion monthly in tokenized asset volume for Wall Street.