Crypto might still be banned in mainland China, but signs are emerging that the world’s second-largest economy isn’t staying on the sidelines forever. A Shanghai regulator reportedly held a rare meeting on stablecoins and digital currencies.
This comes in when the digital assets market is rallying high, printing green indexes all around. The cumulative crypto market cap surged by almost 6% over the last day to hit $3.67 trillion. Its 24-hour trading volume has now breached $230 billion. Bitcoin (BTC) made a huge comeback to mark a fresh all-time high of $118,400.
Shanghai eyes stablecoins
According to the report, a post on the Shanghai State-owned Assets Supervision and Administration Commission’s official WeChat mentioned that the Thursday meeting brought together 60-70 officials and experts, including policy voices from Guotai Haitong Securities who presented global stablecoin developments and offered strategic policy suggestions.
It is a move that marks a subtle but notable shift in tone for a country that outlawed crypto trading and mining back in 2021. The city of Shanghai is China’s financial nerve center and a frequent testing ground for pilot reforms.
It added that the meeting stopped short of endorsing any change in crypto rules. However, regulator He Qing highlighted the need for “greater sensitivity to emerging technologies and enhanced research into digital currencies.” This approach would have been inconceivable even a year ago.
Chinese tech giants like JD.com and Ant Group are reportedly preparing applications to issue yuan-backed stablecoins via Hong Kong. The landmark legislation for stablecoin licensing is expected to go live on August 1. That move is seen as a key part of Hong Kong’s effort to reposition itself as Asia’s digital asset capital.
Meanwhile, the mainland’s crypto watchdogs aren’t dropping their guard. The Beijing Internet Finance Association issued a stern warning on Wednesday against stablecoin scams and unlicensed fundraising schemes. The watchdog flagged buzzwords like “DeFi,” “Web3” and “stablecoins” as red flags. They are accusing bad actors of mimicking Ponzi models to lure retail investors. “These activities can easily evolve into crimes such as illegal fundraising, financial fraud, and money laundering,” the group said.
Dollar rules stablecoins
Pressure is still mounting as the US dollar accounts for more than 99% global stablecoin market. However, some Chinese policymakers are increasingly uneasy about ceding control of digital trade rails to American currency-backed tokens.
For exporters across China’s southern provinces, dollar stablecoins like USDT and USDC have already become a shadow settlement layer for international deals. The renminbi makes up less than 3% of global cross-border flows. A Hong Kong-issued RMB stablecoin could be Beijing’s answer to breaking the dollar’s monopoly.
If green-lit, such a product would allow offshore users to transact in digital RMB tokens without the underlying currency ever leaving China. It’s a workaround that protects Beijing’s regulatory firewall while offering an alternative to the dollar.
Data shows that the global stablecoin market cap stood around $262.56 billion on Friday. Tether’s USDT is leading the category with a cap of $160 billion while Circle’s USDC holds a cap of $62.8 billion. DAI is another major stablecoin in the tally with a circulation of 5.36 billion. Running the wave up, Bitcoin price surged by 6% in the last 24 hours. BTC posted a fresh ATH of above $118,400 before crawling back to the $117K zone. Its 24-hour trading volume spiked by 93% to hit $117.7 billion.
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