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Chinese regulators have banned the issuance of unapproved yuan-pegged stablecoins and tokenised risk-weighted assets both domestically and overseas.
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The People’s Bank of China (PBOC) stated that these restrictions are designed to protect the stability of the yuan and encourage the adoption of the state-backed e-CNY.
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While China has tightened its grip to curb capital outflows, Japan is expanding its market through collaborations between major banks and software companies.
Chinese regulators have banned the issuance of unapproved Chinese yuan-pegged stablecoins overseas and of tokenised risk-weighted assets (RWAs), applying to both domestic and foreign issuers.
In a joint statement released on Friday, 6 February, the People’s Bank of China (PBOC) and several other government agencies said stablecoins pegged to fiat currencies could undermine the stability of the yuan, without the necessary regulatory oversight.
Businesses are also now prohibited from including the phrases ‘stablecoin’, ‘RWA’, or ‘cryptocurrency’ in their names or stated business scope.
The ban comes amid “new circumstances and new challenges”, the notice said. It is designed to encourage use of the state-backed central bank digital currency (CBDC) – the e-CNY – which China has spent years developing.
“The authorities intend to carefully regulate a potential parallel ecosystem of ‘private digital yuan’ emerging through offshore stablecoins, especially at a time when the sovereign e‑CNY is moving from pilot to broader deployment,” said Winston Ma, Adjunct Professor and New York University (NYU) Law School, and former Managing Director of CIC, China’s Sovereign Wealth Fund, told Trade Finance Global (TFG).
“In 2026, the PBOC’s tighter stance on private crypto and yuan‑stablecoins should be read alongside its e‑CNY offensive, such as experimenting with features like interest‑bearing digital yuan,” he said.
A policy U-turn
China’s attitude to stablecoins and cryptocurrencies appeared to soften last year. They have historically taken a hard-line approach against cryptocurrencies: Bitcoin and Ether, and other similar cryptocurrencies, have no legal status under China’s financial laws, a status which the PBOC reaffirmed on Friday.
But, in a speech shortly after the Hong Kong Legislative Council passed the Stablecoins Bill and the US Senate approved the GENIUS Act in quick succession, the governor of the PBOC, Pan Gongsheng, addressed new payment technologies.
“Central bank digital currencies and stablecoins are thriving, making possible the simultaneous processing of payment and settlement,” he said.
At this point, China may have been seeking to challenge the dominance of US dollar-pegged stablecoins (accounting for around 90% of global issuance), as the world moves to de-dollarise.
In September 2025, China debuted a yuan stablecoin in Kazakhstan: the AxCNH, a product by fintech AnchorX. To many, this signalled a regulatory pivot and Chinese blockchain ambition.
The present clampdown has been attributed to curbing financial fraud and disorderly capital outflows. Innovation should be regulated and restricted to Hong Kong, it is argued.
Elsewhere in East Asia, Japan builds momentum
On the other hand, Japan’s stablecoin market has seen steady growth. JPYC, Japan’s first licensed stablecoin issuer, has been using business and corporate collaboration to popularise the yen-backed cryptocurrency.
Last week, JPYC announced a collaboration with software company Asteria Corporation, embedding the yen-backed stablecoin in companies’ systems and allowing digital payment experimentation and trialling.
In November 2025, Mitsubishi UFJ Bank, Sumitomo Mitsui Banking Corporation (SMBC), and Mizuho Bank announced plans to jointly issue a yen-backed and a US dollar-backed (USD-backed) stablecoin.
The role of both currencies differs, with the yen-backed stablecoin being positioned as a low-cost alternative for domestic business rather than vying to challenge USD stablecoin dominance.
