DeutschChina wants to react to the US stablecoin law GENIUS and is now planning to establish its own stablecoin based on the yuan. The Chinese leaders want to challenge the dominance of the US dollar on the international market. China is beginning its long-awaited opening in favor of digital assets, after initially reacting with bans in 2021.
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China Plans its Own Yuan Stablecoin, Challenges USD Dominance
The opening of the USA in favor of stablecoins is developing into an international political issue. After the United States passed a stablecoin law in June with the GENIUS Act, China is now following suit.
The People’s Republic wants to establish its own stablecoin based on the Chinese fiat currency yuan – Reuters declared this yesterday, citing insider statements.
Reuters describes this process as a “fundamental change”, as the Chinese state has been at war with cryptocurrencies since 2021. The Chinese government wants to use its reaction to create a counterweight to the US initiative, the insider explained.
Through GENIUS, the USA wants to trigger a wide distribution of stablecoins that reflect the US dollar. However, the law focuses on the domestic market and places the operators of stablecoins under stricter state supervision.
US dollar stablecoins have long since conquered the international market. China now hopes that the provision of a digital yuan could contribute to the popularization of the Chinese currency around the globe.
“The State Council – China’s cabinet – will review and possibly approve a strategy paper this month for greater global use of the currency in order to catch up with the US in the area of stablecoins”, Reuters explains.
Based on the GENIUS Act, the Chinese government wants to define the specific tasks of its own regulatory authorities in dealing with stablecoins. In addition, values are defined that the Chinese stablecoin should achieve in global use.
Stablecoin Rises to China’s Top Focus
According to the source, the stablecoin and its international use have already risen to a political issue of the highest importance. The country’s leaders are expected to meet by the end of the month to discuss the international use of the Renminbi Yuan and, more broadly, stablecoins.
The highest levels of the Chinese state apparatus are expected to decide what limitations the use of stablecoins will have on the Chinese market and in which direction the new Yuan stablecoin should develop.
In 2021, China established its own CBDC with the digital yuan, but it did not succeed in gaining international popularity. This is a first attempt to raise the importance of the Chinese currency to an international level.
According to Reuters, the yuan is limited by too strict state supervision. The high importance of Chinese exports compared to imports also has a disadvantage for the currency.
From August 31 to September 1, the Chinese government wants to discuss the use of stalecoins in cross-border payments with its partners in the Shanghai Cooperation Organization (SCO).
Members of the SCO are primarily Russia and former Soviet republics, as well as India, Pakistan and Iran.
In the long term, this development could lead to a general opening of China to crypto. Such processes are considered bullish, as the Chinese market has huge amounts of money available that could then flow into crypto.
