China has reinforced its ban on unauthorized issuance of stablecoins pegged to the yuan, including those issued from abroad. In February, eight Chinese authorities, including the People's Bank of China, prohibited any company, domestic or foreign, from issuing yuan-backed stablecoins without approval. This move is part of China's efforts to maintain control over its currency and capital outflows.
The decision comes after a period of uncertainty that began in the summer of 2025, when China considered allowing the issuance of yuan stablecoins from Hong Kong or Shanghai. However, the plan was quickly abandoned, and companies such as Ant Group and JD.com suspended their projects in Hong Kong.
China's Digital Currency
China is instead focusing on the development of its central bank-controlled digital currency, the e-CNY. The e-CNY is distributed by identified institutions and is subject to permission, allowing authorities to control participants and transactions. In June, the Shanghai international e-CNY center signed agreements with 26 financial institutions to join its cross-border transfer platform, CBETS.
Stablecoin Regulations
Hong Kong has also implemented regulations on stablecoins, but none of the approved licenses are for yuan-backed stablecoins. The Hong Kong Monetary Authority has only approved two licenses, both for stablecoins pegged to the Hong Kong dollar.
The failure of the CNH₮, a yuan-backed stablecoin launched by Tether in 2019, further confirms the lack of demand for private yuan stablecoins. Tether stopped issuing new CNH₮ tokens in February 2026 and announced that it would cease redemptions in a year.
China's efforts to internationalize the yuan digitally while maintaining control over capital outflows have led to the development of the e-CNY. The country aims to achieve faster and cheaper international payments without sacrificing its control over capital outflows.
