Digital Yuan Fails, Hong Kong Experiments: China’s Race Against Dollar Stablecoins

China views the US GENIUS Act and the rise of dollar-backed stablecoins as a serious threat to its financial sovereignty.

The new law allows regulated US banks to issue stablecoins that could attract up to $1.75 trillion in circulation over three years, creating digital dollars that can move globally beyond China’s capital controls.

Beijing fears these blockchain-based tokens could undermine its financial repression system and the yuan’s role in international trade.

In response, China is experimenting with its own controlled blockchain solutions, including potential renminbi-backed stablecoins in Hong Kong that would be fully traceable and programmable, reflecting Beijing’s vision of using blockchain to enhance rather than diminish state control over money.