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- China is focusing on stablecoins to defend its currency from U.S. dollar dominance, highlighting offshore opportunities and domestic limits.
- Beijing's stablecoin strategy is a cautious complement to the e-CNY, aiming to extend the yuan's reach abroad without loosening its grip at home.
- Japan is preparing to issue a yen-backed stablecoin, signaling a broader Asian race to keep pace with U.S. dollar tokens.
Welcome to Asia Morning Briefing, a daily summary of top stories during U.S. hours and an overview of market moves and analysis. For a detailed overview of U.S. markets, see CoinDesk's Crypto Daybook Americas.
Chinas growing focus on stablecoins is less about embracing crypto and more about defending its currency from U.S. dollar dominance, says Dr. Vera Yuen of Hong Kong University's Business School, who argues the shift highlights offshore opportunities but also deep domestic limits.
Beijing's shift comes as Washington moved first to create a regulatory framework for the stablecoin industry in the U.S. Reuters recently reported that China's State Council is reviewing a roadmap for yuan-backed stablecoins later this month, with Hong Kong and Shanghai expected to fast-track adoption.
Don't miss another story. Subscribe to the Crypto Daybook Americas Newsletter today. See all newslettersIn an earlier interview, Animoca Group president Evan Auyang told CoinDesk the trigger was the U.S. GENIUS Act, which cements dollar-pegged tokens as part of global finance.
He said the law is pressuring China to act a lot faster, pushing Beijing to consider stablecoins not as speculative instruments, as once described by the People's Bank of China, but as necessary infrastructure to keep pace in global trade and settlement.
Yuen said the government first prioritized the e-CNY, its Central Bank Digital Currency, because it offered control, traceability, and seigniorage profits features that regulators valued over those of privately issued tokens. But she noted that stablecoins have a clear edge in international use.
Many CBDCs are developed for domestic use, so for international use of CBDCs, there is a big problem of interoperability of different systems. Stablecoins are designed to be used internationally, so it can be a better option for cross-border transactions, she told CoinDesk.
"Focusing on stablecoins allows China to respond proactively to global regulatory debates and technological advances, ensuring it remains competitive and prepared as the digital currency landscape evolves," Yuen continued.
Capital controls still mean any yuan token will stay offshore, with Hong Kongs new regime providing the testing ground. However, limited CNH liquidity underscores how narrow the runway is for Chinas internationalization push.
"This would limit the issuance of offshore renminbi stablecoins, constraining its attractiveness as a means of payment," Yuen said.
China is also not moving in isolation.
In Japan, Monex Group is preparing to issue a yen-backed stablecoin tied to government bonds, joining other domestic players such as SBI and JPYC.
Unlike China, however, where capital controls push experimentation offshore, Japans regulators are laying the groundwork for stablecoins to circulate at home, signaling Asias broader race to keep pace with U.S. dollar tokens.
For now, Beijings stablecoin experiment looks less like a replacement for the e-CNY and more like a cautious complement, a way to extend the yuans reach abroad without loosening its grip at home.
BTC: BTC held at $111K as Nvidia posted strong earnings.
ETH: ETH is trading at $4,500, and history shows that a green August often precedes a 60% year-end rally, though typically after a September dip.
Gold: Gold traded Wednesday at $3,443 per ounce, up 1.6% from Tuesdays close, extending a 37% year-over-year rally, though prices slipped in early trading as attention turned to Nvidia earnings and Trumps Fed feud.
S&P 500: The S&P 500 rose 0.2% Wednesday, pushing Wall Street to a new all-time high ahead of Nvidias earnings.
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Sam Reynolds is a senior reporter based in Asia. Sam was part of the CoinDesk team that won the 2023 Gerald Loeb award in the breaking news category for coverage of FTX's collapse. Prior to CoinDesk, he was a reporter with Blockworks and a semiconductor analyst with IDC.
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