HONG KONG (Reuters), July 11 – In a surprising shift for a country where crypto trading and mining have been banned since 2021, a key Shanghai regulator has initiated high-level discussions on stablecoins and digital currencies. This signals that China may be reevaluating its crypto strategy as stablecoins gain momentum worldwide.
The Shanghai State-owned Assets Supervision and Administration Commission (Shanghai SASAC) convened the meeting with government officials and policy experts to consider strategic responses to stablecoins and digital currencies. According to a WeChat post by the commission, the goal was to promote deeper research and readiness in response to emerging technologies.
The Purpose Behind the Meeting
He Qing, Director of the Shanghai SASAC, said during the meeting:
“We need greater sensitivity to emerging technologies and enhanced research into digital currencies.”
This marks a notable departure from the central government’s previously rigid stance on digital assets. It also underscores Shanghai’s role as China’s financial innovation hub, often leading pilot programs in financial and regulatory reforms.
What Are Stablecoins and Why Are They Important?
Stablecoins are a category of cryptocurrencies that are typically pegged to a fiat currency, such as the U.S. dollar or Chinese yuan. This peg provides price stability while leveraging the benefits of blockchain technology.
Key features of stablecoins:
- Fast and low-cost transactions
- Ideal for remittances, e-commerce, and digital finance
- Transparent and secure due to blockchain
- Can support financial inclusion and cross-border trade
Globally, countries like the U.S. and regions like Europe are advancing clear regulatory frameworks to support stablecoin innovation.
Why Shanghai Matters in China’s Digital Currency Strategy
Shanghai is not only China’s financial nerve center, but also a testing ground for new regulatory ideas. The recent meeting featured a policy expert from Guotai Haitong Securities, who:
- Explained the history and evolution of cryptocurrencies
- Analyzed types and mechanics of stablecoins
- Reviewed global regulatory models
- Offered policy recommendations for China’s digital currency framework
This is the first major public discussion at a regional regulatory level since the 2021 crypto ban, suggesting a shift in tone—even if not yet in official policy.
JD.com and Ant Group Push for Yuan-Based Stablecoin
Two of China’s most influential companies—e-commerce giant JD.com and fintech powerhouse Ant Group—have reportedly urged the People’s Bank of China (PBOC) to allow the development of yuan-pegged stablecoins.
The rationale? To counter the increasing global dominance of dollar-based stablecoins, such as USDT and USDC.
Sources say these firms are exploring obtaining stablecoin licenses in Hong Kong, where a dedicated legal framework for stablecoins is set to go into effect on August 1, 2025.
Hong Kong: A Gateway for China’s Crypto Innovation?
Hong Kong, which operates under the “one country, two systems” model, has taken a more progressive approach to digital assets. Its upcoming stablecoin legislation will provide:
- Regulatory clarity for issuers
- Consumer protection norms
- Frameworks for auditing and reserve management
This makes Hong Kong a potential launchpad for Chinese firms to experiment with stablecoins without violating mainland regulations.
Central Bank Still Wary of Crypto Risks
Despite the signs of regional softening, China’s central government remains cautious. Just last month, PBOC Governor Pan Gongsheng emphasized:
“The boom in digital currencies and stablecoins poses huge challenges to financial regulation.”
This highlights the internal policy tension between innovation and control—a classic feature of China’s tech regulation approach.
Bitcoin Surge Adds Pressure
Adding to the urgency is the global momentum in the crypto market. This week, Bitcoin reached an all-time high near $112,000, putting further pressure on China to reconsider its blanket ban.
As crypto becomes more mainstream globally, ignoring it may isolate China from critical developments in financial infrastructure, cross-border payments, and Web3 innovation.
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