In response to the rising influence of U.S. dollar-pegged cryptocurrencies, a Chinese Communist Party-backed publication called on China to accelerate its stablecoin development and expand the international currency status of the Chinese Yuan.
What Happened: An op-ed published in Study Times highlighted the increasing role of dollar-pegged stablecoins like Tether USDT/USD and USD Coin UDSC/USD in bridging the traditional and digital currency worlds.
The report pointed out that these stablecoins have made significant strides in various sectors, such as serving as trading mediums on cryptocurrency exchanges, in decentralized finance, and in the developing world for wealth preservation, thereby solidifying the dollar’s international currency status.
The op-ed, originally published in Chinese, stressed that China should bolster its stablecoin development by increasing internet platform token usage, integrating China’s sovereign credit with global application scenarios for these tokens.
“With proper design and risk controls, this could significantly boost the renminbi’s [Yuan] international currency status while effectively countering challenges from dollar-pegged stablecoins.”
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The report identified three main digital currency development directions: cryptocurrencies, stablecoins, and Central Bank Digital Currencies. It recommended a balanced approach, pursuing all three avenues concurrently for maximum benefit.
Notably, China has its own CBDC called “Digital renminbi,” or “digital RMB,” which acts as the legal tender.
Study Times is sponsored by the Party School of the Central Committee of the CCP.
Why It Matters: The call for China to enhance its stablecoin development comes at a time when the U.S. is also recognizing the potential of stablecoins. In a recent address at the Blockworks Digital Asset Summit, President Donald Trump urged Congress to pass stablecoin legislation, highlighting their potential to strengthen the U.S. financial system and maintain the dollar’s global dominance.
Meanwhile, rumors have floated around that China has been working behind closed doors to create a strategic Bitcoin BTC/USD reserve, although the accuracy of such claims remains disputed.
Despite a ban on cryptocurrency trading and mining, China continues to dominate the Bitcoin network, controlling 55% of the global hash rate as of September 2024
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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