Asia Morning Briefing: Animoca Exec Says U.S. Heat Is Pushing China’s Stablecoin Agenda

China’s stance on stablecoins is shifting, moving from skepticism to a sense of urgency. This change is driven by the growing mainstream adoption of stablecoins globally and the perceived strengthening of the US dollar’s dominance in Asian finance, fueled by the recent GENIUS Act. This act provides regulatory clarity for fiat-backed stablecoins in the US, effectively solidifying their role in the global financial system.

Animoca Group President Evan Auyang highlights this shift, noting that China views the GENIUS Act as a proactive move by the US to control the stablecoin space. This, coupled with the dollar’s position as the dominant reserve currency, pressures China to act swiftly. The focus is now on creating regulated, offshore yuan (CNH) stablecoins to enhance the internationalization of the RMB while maintaining capital controls.

Previously, the People’s Bank of China (PBOC) characterized stablecoins as destabilizing. However, the perspective has changed. A regulated CNH stablecoin, potentially issued in Hong Kong, provides a pathway for internationalizing the yuan while adhering to Beijing’s capital controls. This approach complements the e-CNY, which primarily focuses on domestic use within central banks and institutions. Hong Kong, with its autonomous legal framework, serves as a testing ground for such initiatives. Liquidity pools in Hong Kong, facilitating transactions in HKD, CNH, and e-CNY, also emerge as a key consideration.

Auyang predicts that even international business-to-business payments will favor tokenized fiat over permissioned CBDCs. This trend isn’t limited to China; many countries are likely to develop their own regulated stablecoins following the US’s lead. The goal isn’t to replace the dollar, but rather to provide alternative, regulated options within the existing global financial landscape.

Current market movements show Bitcoin consolidating around $118,000, ETH maintaining a strong uptrend, and gold prices falling slightly. The Nikkei 225 and US stocks experienced positive growth. News in the crypto space includes Tether’s plans for a US institutional stablecoin and concerns from Hong Kong’s financial regulator about overexcitement in the stablecoin market.