Is Shanghai Secretly Paving the Way for a Chinese Stablecoin Revolution?

Shanghai regulators are making waves by openly discussing stablecoins, even as China’s national crypto ban remains in force. The city’s latest moves hint at a possible policy rethink at the highest levels.

A recent meeting of Shanghai’s State-owned Assets Supervision and Administration Commission (SASAC) brought together dozens of local officials and experts to debate how China should respond to the global rise of stablecoins and digital currencies.

Are Shanghai officials challenging Beijing’s crypto crackdown?

The meeting marks a notable shift in tone for China, where cryptocurrency trading has been strictly prohibited since 2021. SASAC director He Qing called for greater sensitivity to emerging technologies and enhanced research into digital currencies, highlighting the urgency of adapting to global trends.

Images from the session showed 60 to 70 participants, underscoring the seriousness of the discussion. Shanghai, as China’s top international financial center, often leads pilot programs for new regulatory approaches.

Did you know?
Shanghai is often China’s testing ground for financial reforms, with many national pilot projects launching there before wider adoption.

Could a yuan-backed stablecoin reshape global finance?

Chinese tech giants JD.com and Ant Group are reportedly pushing for the central bank to allow the creation of a yuan-pegged stablecoin. Their goal: counter the growing dominance of dollar-backed stablecoins and ensure China’s currency remains competitive in the digital era.

State media and financial experts have echoed these calls, with recent articles urging that stablecoin development should be sooner rather than later. The People’s Bank of China (PBOC) has acknowledged stablecoins’ transformative potential, especially for cross-border payments and global trade.

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Shanghai’s regulators urge research into digital currency innovation

At the meeting, a policy specialist outlined the evolution and varieties of stablecoins and analyzed global regulatory frameworks. Recommendations included strengthening research, exploring blockchain applications, and considering policy changes to support digital asset innovation.

Shanghai’s SASAC specifically called on state-owned enterprises to study the role of digital assets in trade, supply chain finance, and asset tokenization. The regulator stressed the importance of staying alert to emerging technologies and proactively shaping policy responses.

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The push for stablecoin research comes as China’s digital yuan pilot expands in several cities. While the digital yuan is designed as an official digital alternative to cash, stablecoins offer a different model, pegged to reserve assets and potentially usable across borders.

Hong Kong is also emerging as a potential testing ground for yuan-backed stablecoins, thanks to its offshore renminbi market and upcoming stablecoin regulations. Some PBOC advisers suggest using Hong Kong for stablecoin pilots, given mainland China’s strict capital controls.

Shanghai’s latest moves signal a growing recognition that digital currencies and stablecoins could shape the future of finance. As global adoption accelerates, China’s next steps in this space will be closely watched by markets and regulators worldwide.

If Shanghai’s initiative gains traction, it could mark the beginning of a new chapter in China’s digital currency journey, one that balances innovation, regulation, and the strategic ambitions of the world’s second-largest economy.