What future will the Renminbi stablecoin have in the current environment?

The future development of the CNY stablecoin (i.e., digital assets pegged 1:1 with the CNY) is influenced by various factors, including regulatory policies in mainland China and Hong Kong, global trends in the stablecoin market, the strategic goals of CNY internationalization, and the geopolitical and economic environment. The following is a detailed analysis of the future prospects of the CNY stablecoin from multiple perspectives, along with a discussion of the global regulatory environment and the background of the GENIUS Act. 1. Analysis of the Current Environment Strict Ban on Mainland Policies: Mainland China has adopted a comprehensive prohibition policy against private stablecoins, viewing them as a threat to monetary sovereignty. Since 2021, the Chinese government has banned trading and issuance of Crypto Assets, focusing on the development of Central Bank Digital Currency (Digital Money, e-CNY). Digital Renminbi Priority: Digital Renminbi has been piloted in multiple cities, applied to retail, cross-border payments, and government services. In 2024, the People's Bank of China further expanded the pilot scope of Digital Renminbi, aiming to replace private stablecoins and strengthen the Central Bank's control over the monetary system. Restrictions on private stablecoins: Any private stablecoin pegged to the CNY cannot operate legally in mainland China, and issuers attempting to issue such stablecoins will face severe penalties. Hong Kong's Special Status Regulatory Opening: As a Special Administrative Region, Hong Kong has an independent financial regulatory system. The "Stablecoin Ordinance Draft" effective in August 2025 clearly supports the development of stablecoins, allowing stablecoins pegged to the Hong Kong dollar, US dollar, and even CNY to be issued in Hong Kong. RMB Internationalization Window: Hong Kong is positioned as a stronghold for RMB internationalization. The Hong Kong Monetary Authority (HKMA) encourages the pilot of RMB stablecoin to promote the use of RMB in cross-border trade and finance. Market Dynamics: Hong Kong has attracted global issuers (such as Tether planning to relocate its headquarters to Hong Kong), providing potential development space for CNY stablecoin. The global stablecoin market is dominated by the US dollar: 98% of stablecoins are pegged to the US dollar (such as USDC and USDT), with trading volume being dominant. The market share of the CNY stablecoin is negligible, facing strong competition from US dollar stablecoins. Regulatory competition: The regulatory frameworks of the EU (MiCA), the USA (GENIUS Act), Singapore, and Hong Kong provide legal status for stablecoins, while the ban in mainland China restricts the global competitiveness of the CNY stablecoin. Geopolitics: The financial competition between China and the United States and the trend of de-dollarization provide strategic opportunities for the RMB stablecoin, but the implementation is quite challenging. 2. The Future Prospects of CNY Stablecoin The potential of CNY stablecoin will be analyzed from three time dimensions: short-term (1-2 years), medium-term (3-5 years), and long-term (5-10 years): Short-term (2025-2027) Hong Kong's Dominant Role: Hong Kong's "Stablecoin Regulation Draft" provides a legalization path for CNY stablecoin. After August 2025, the first batch of CNY stablecoins is expected to be approved in Hong Kong, initially possibly issued by local banks or large enterprises (such as institutions supported by Ant Group or Tencent). Hong Kong's "regulatory sandbox" model allows enterprises to test the CNY stablecoin in a controlled environment, primarily applied to cross-border payments (such as the Guangdong-Hong Kong-Macao Greater Bay Area) and trade settlements. The competition of digital renminbi: Mainland China will continue to prioritize the development of digital renminbi, and private renminbi stablecoins may be limited to Hong Kong, subject to strict anti-money laundering (AML) and counter-terrorism financing (CFT) requirements. The popularization of the digital Renminbi may compress the market space for private stablecoins, especially in the mainland. Market Challenge: The CNY stablecoin faces strong competition from USD stablecoins, with USDC and USDT dominating the global payment and DeFi markets. Issuers need to overcome obstacles related to technology, compliance, and market acceptance, and the market size may be relatively small in the short term. Opportunities: The trade demands of countries along the "Belt and Road" initiative provide application scenarios for CNY stablecoins. For example, Southeast Asian and African countries may accept CNY stablecoins for cross-border settlements. As a global financial center, Hong Kong may attract international investors to try the CNY stablecoin. Medium-term (2028-2030) promotion of CNY internationalization: The Chinese government regards the internationalization of CNY as a long-term strategy, and the CNY stablecoin may become a complementary tool to the digital yuan, particularly in the Hong Kong and Southeast Asian markets. If Hong Kong's regulatory framework successfully attracts issuers, the CNY stablecoin may gain greater recognition in Asian financial markets such as Singapore and Thailand. Technology and Ecological Development: Advances in blockchain technology may reduce the issuance and operational costs of CNY stablecoins, attracting more enterprises to participate. The integration with DeFi protocols may promote the use of CNY stablecoin in decentralized finance, such as providing liquidity on platforms like Aave or Uniswap. Global Competition: If the United States passes the GENIUS Act, the global dominance of the USD stablecoin will be further consolidated, while the CNY stablecoin needs to find breakthroughs in specific regions (such as Asia and Africa). The EU's MiCA framework may promote the development of euro stablecoins, putting competitive pressure on the renminbi stablecoin. Policy Risk: The mainland China may implement stricter regulations on the Hong Kong CNY stablecoin to prevent capital outflow or financial risks. Geopolitical tensions (such as the China-U.S. trade friction) may limit the global acceptance of the CNY stablecoin. Long-term (2030-2035) global monetary landscape: If the internationalization of the renminbi makes substantial progress, the renminbi stablecoin may occupy a certain market share in Belt and Road countries and emerging markets, becoming a regional alternative to the US dollar stablecoin. The global promotion of the Digital Currency Electronic Payment (DCEP) may provide technical support and infrastructure for private RMB stablecoins, facilitating their application in cross-border payments. De-dollarization trend: In the context of de-dollarization, the RMB stablecoin may collaborate with local currency stablecoins from countries like Russia and India to form a regional currency alliance, challenging the dollar-dominated stablecoin market. However, the global reserve currency status of the US dollar is difficult to shake in the short term, and the stability of the renminbi stablecoin depends on the continued enhancement of China's economic influence. Regulatory Coordination: If the global regulatory framework tends to become coordinated (such as through cooperation from G20 or IMF), the CNY stablecoin may gain legitimate status in the international payment system. Hong Kong may become the global issuance center for CNY stablecoin, forming a tripartite structure with the United States (USD stablecoin) and the European Union (EUR stablecoin). 3. Key influencing factors The future development of the CNY stablecoin depends on the following factors: Policies in mainland China: If mainland China relaxes restrictions on private stablecoins, the CNY stablecoin may gain more development space. The successful promotion of digital renminbi may squeeze the market for private stablecoins, but it may also provide technical support for renminbi stablecoins. Hong Kong's regulatory environment: Hong Kong's flexible regulation and sandbox model are the main driving forces for CNY stablecoins. The approval progress of the first batch of licenses and the selection of issuers will determine its short-term performance. If Hong Kong successfully attracts global issuers (such as Tether or Circle), the market share of the CNY stablecoin may expand rapidly. Global Acceptance: The acceptance of the CNY stablecoin depends on the level of use of the CNY in global trade and finance. Currently, the CNY accounts for about 2.5% of global payments (SWIFT data), far lower than the US dollar (over 40%). The "Belt and Road" initiative and the Asian Infrastructure Investment Bank (AIIB) may provide application scenarios for the CNY stablecoin. Technology and Compliance Costs: The maturity of blockchain technology and the compliance capabilities of issuers will affect the operational efficiency of CNY stablecoins. High compliance costs may restrict the participation of small issuers, and the market may be dominated by large institutions such as banks or tech giants. Geopolitical and Economic Environment: The financial competition between China and the United States may drive China to accelerate the development of the renminbi stablecoin, but trade sanctions or financial isolation may limit its global promotion. The weakening of emerging markets' reliance on the US dollar will create opportunities for the CNY stablecoin. 4. Comparison of Regulatory Flexibility with the "GENIUS Act": The "GENIUS Act" provides flexibility for USD stablecoins through state-level decentralization, while Hong Kong's regulatory sandbox model offers similar innovative space for CNY stablecoins. However, the ban on private stablecoins in mainland China limits their development. Currency Goals: The "GENIUS Act" aims to solidify the US dollar's position as the global reserve currency, while the RMB stablecoin serves the strategy of internationalizing the Renminbi, with the target market focusing more on Asia and emerging economies. Implementation progress: The "GENIUS Act" is hindered by political differences and has not yet been passed, while the regulation of stablecoins in Hong Kong has entered the implementation stage, with the CNY stablecoin possibly making breakthroughs first in Hong Kong. Market Competition: The US dollar stablecoin occupies 98% of the global market share, while the Chinese yuan stablecoin needs to find breakthroughs in regional markets (such as Southeast Asia and Africa) and will find it difficult to challenge the dollar's dominant position in the short term. 5. Market Impact and Investment Opportunities Market Impact: Short-term: Renminbi stablecoins may see initial applications in Hong Kong and the Guangdong-Hong Kong-Macau Greater Bay Area, with a limited market size (expected to be in the tens of billions of dollars). Medium term: With the advancement of the internationalization of the CNY, the CNY stablecoin may capture a certain share in the "Belt and Road" countries and Asian markets, with the market scale potentially growing to the level of tens of billions of dollars. Long-term: If China's economic influence continues to expand, the CNY stablecoin may become a regional alternative to the USD stablecoin, especially under the trend of de-dollarization. Investment opportunities: Local enterprises in Hong Kong: Pay attention to banks and technology companies in Hong Kong (such as Standard Chartered Bank Hong Kong, Ant Group), as they may become the first issuers of CNY stablecoin. DeFi platforms: CNY stablecoins may find application in DeFi protocols in Asia, and investors can pay attention to the performance of platforms like Aave and Uniswap in the Asian market. Cross-border payments: The application of CNY stablecoins in cross-border trade may drive demand for related blockchain infrastructure (such as ConsenSys, Chainlink). Risk: Regulatory Uncertainty: Changes in mainland China’s policies may affect the legality of CNY stablecoin. Market competition: The strong position of the US dollar stablecoin and the rise of the euro stablecoin may compress the space for the CNY stablecoin. Geopolitics: The tension in China-US relations may limit the global promotion of the CNY stablecoin. 6. Conclusion and Recommendations The future development of the Renminbi stablecoin primarily relies on regulatory support from Hong Kong in the short term, and it may gain initial application in cross-border payments and regional finance. In the medium term, the promotion of Renminbi internationalization and the development of blockchain technology will provide growth momentum, but it needs to overcome the competition from US dollar stablecoins and the restrictions of mainland policies. In the long term, the Renminbi stablecoin may occupy a place in "Belt and Road" countries and emerging markets, becoming part of the de-dollarization trend, but it is unlikely to challenge the US dollar's global dominance. Recommendations: Issuers: Prioritize applying for stablecoin licenses in Hong Kong, focusing on application scenarios in the Guangdong-Hong Kong-Macao Greater Bay Area and "Belt and Road" countries. Investors: Pay attention to stablecoin projects and related blockchain infrastructure in Hong Kong, and be wary of the risks brought by changes in mainland policies. Policymakers: Hong Kong should continue to optimize its regulatory framework to attract global issuers while coordinating policies with mainland China to ensure the compliant development of CNY stablecoins.