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Chinese authorities have taken steps to enhance oversight of digital assets, prohibiting the unauthorized issuance of yuan-pegged stablecoins abroad and expanding restrictions to tokenized real-world assets associated with the nation’s currency.
Key Takeaways:
- China has prohibited unauthorized yuan-pegged stablecoins and related tokenized assets to safeguard monetary sovereignty.
- Officials reiterated the ban on crypto payments while advocating for the state-supported digital yuan.
- Japan and Hong Kong are progressing towards regulated stablecoin markets, indicating a regional policy divergence.
In a joint announcement made on Friday, the People’s Bank of China (PBOC) along with seven government bodies stated that individuals and organizations, whether domestic or international, are not permitted to issue renminbi-linked stablecoins without official consent.
Officials contended that such tokens replicate essential functions of money and could pose a risk to monetary sovereignty.
China Claims Yuan Stablecoins Endanger Currency Stability
Stablecoins tied to fiat currencies “perform some of the functions of fiat currencies,” the notice indicated, cautioning that circulation beyond regulatory supervision could jeopardize the stability of the yuan.
The regulations also focus on services related to tokenized financial assets, including blockchain-based representations of bonds or stocks.
Foreign entities are prohibited from offering related products to users within China without authorization from regulators.
Beijing reaffirmed its long-standing stance on crypto payments, asserting that assets like Bitcoin and Ether do not possess legal tender status and that facilitating transactions or related services is deemed illegal activity.
This policy builds on a comprehensive ban established by the central bank in 2021 that effectively eliminated cryptocurrency trading and payments from the domestic financial landscape.
China’s central bank and seven agencies just blocked all unapproved yuan-pegged stablecoins. Foreign or domestic, it doesn’t matter…the only digital yuan they want is the one they control.
Only the state-run digital yuan gets a seat at the table. pic.twitter.com/JL7dfC0Ne2— Max Avery (@realMaxAvery) February 6, 2026
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Legal expert and former sovereign wealth fund executive Winston Ma noted that the restrictions apply to both onshore and offshore versions of the renminbi.
The offshore yuan, referred to as CNH, is intended for foreign exchange flexibility while maintaining capital controls.
The measures seem to align with a broader strategy of restricting privately issued digital currencies while promoting the state-backed digital yuan.
China has invested several years in developing the e-CNY central bank digital currency and recently permitted commercial banks to offer interest to users holding digital yuan wallets to encourage adoption.
Japan, Hong Kong Adopt Stablecoin Regulation as China Tightens Rules
In other parts of Asia, policymakers have chosen a different approach. Japan established a legal framework for stablecoin issuance in 2023, while Hong Kong intends to begin licensing stablecoin issuers this year.
China briefly considered allowing private companies to issue yuan-pegged tokens in 2025 but later discontinued pilot programs.
Last year, the People’s Bank of China introduced a framework that will enable commercial banks to pay interest on balances held in digital yuan wallets starting January 1, 2026.
Lu Lei, a deputy governor at the PBOC, stated that this change would extend the e-CNY beyond its initial function as a digital cash equivalent and integrate it into banks’ asset and liability management.
Global stablecoin transaction value reached $33 trillion in 2025, reflecting a 72% increase from the previous year, according to Bloomberg data compiled by Artemis Analytics.
USDC emerged as the most utilized stablecoin by transaction volume, processing $18.3 trillion, while Tether’s USDT managed $13.3 trillion, despite retaining its lead by market capitalization at $187 billion.
The increase in activity followed the enactment of the GENIUS Act in July 2025, the first comprehensive U.S. regulatory framework for payment stablecoins.
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