Deputy Director of the National Financial and Development Laboratory: The development model of RMB stablecoin can adopt an "internal-external integration" approach

Author: Yang Tao, Deputy Director of the National Institute of Financial Development

Source: National Institute of Financial Development

RMB Stablecoin Development Model Can Be "Domestic-Offshore and Offshore Combined"

Recently, PBOC Governor Pan Gongsheng pointed out at the 2025 Lujiazui Forum that emerging technologies such as blockchain and distributed ledger have driven rapid growth in central bank digital currencies (CBDCs) and stablecoins, while also posing significant challenges to financial regulation. Indeed, with Hong Kong's Stablecoin Ordinance set to take effect on August 1, discussions around stablecoins have recently gained unprecedented momentum.

Typically, offshore RMB operations refer to financial activities conducted outside mainland China using the RMB as the pricing and settlement currency. Driven by policy, this has evolved into a structure centered on Hong Kong, with multi-point development extending to Singapore, London, and other locations. In contrast, domestic-offshore RMB operations exhibit dual characteristics of both onshore and offshore systems, operating primarily through account management mechanisms to enable capital freedom under specific conditions. Correspondingly, many suggest piloting offshore RMB stablecoins in Hong Kong first, then exploring their use domestically within pilot free trade zones (FTZs) once conditions mature.

We argue that stablecoins built on Web3.0 have already transcended traditional boundaries between onshore and offshore frameworks. To better achieve strategic coordination, proactive regulation, and collaborative advancement, a linked development model integrating domestic-offshore and offshore RMB stablecoins should be considered. There are three main reasons: First, given the fast development of dollar-collateralized stablecoins and evolving global regulatory landscapes, China urgently needs to proactively research and regulate stablecoins from the perspectives of financial security and monetary sovereignty—systematically evaluating pilot reforms for RMB stablecoins rather than passively relying on offshore RMB stablecoins. Second, Hong Kong’s offshore RMB market is relatively limited in scale; under the requirement of 1:1 reserve backing with fiat assets, it may struggle to independently support an RMB stablecoin achieving economies of scale. Third, regulating stablecoin issuance and trading involves frontier challenges such as identity verification and anti-money laundering (AML), with jurisdictions worldwide actively innovating regulations and seeking effective responses. Therefore, relevant central authorities should take the lead in RMB stablecoin regulation while coordinating closely with Hong Kong regulators.

We observe that since its establishment on September 29, 2013, the Shanghai Pilot Free Trade Zone has largely built a system aligned with international trade and economic rules. Meanwhile, central financial regulators are fully supporting the upgrade of Shanghai’s international financial center. The PBOC has announced eight initiatives, including launching a comprehensive reform pilot for offshore trade financial services in the Lingang New Area of Shanghai. Thus, coordinated innovation efforts on RMB stablecoins could be advanced simultaneously in the Shanghai FTZ and Hong Kong.

Regarding domestic-offshore RMB stablecoins (CNY Coin, CNYC), one possible model involves establishing a dedicated RMB stablecoin issuing entity in the Shanghai FTZ, jointly initiated by clearing organizations, major commercial banks, leading payment institutions, and prominent investment firms. This entity would explore blockchain-based issuance and operational mechanisms for RMB stablecoins, creating a wholesale market accessible to authorized institutions—such as digital RMB operators, which possess substantial innovation experience—who could then exchange RMB stablecoins with qualified enterprises or individuals, forming a retail market.

A second model could leverage branches of certain digital RMB operators within the Shanghai FTZ to directly mint and operate RMB stablecoins on-chain, fulfilling full compliance responsibilities when distributing them to specific qualified economic entities. Of course, if banks serve as issuers, it is worth noting that although tokenized deposits explored by some overseas banks or organizations resemble stablecoins, they still differ fundamentally in mechanism. Additionally, some foreign banks aiming to counter disintermediation are researching or attempting to establish tech subsidiaries—or jointly create legal entities—to issue fiat-backed stablecoins, enhancing ecosystem appeal and defending against disruption from the crypto industry. Hence, the exact pathways and key priorities for such RMB stablecoin exploration must be clearly defined.

It must be emphasized that regardless of the model adopted, several requirements must be met concurrently. First, RMB stablecoins must maintain sufficient asset reserves—not only highly liquid assets such as RMB cash and short-term government bonds but also a certain proportion of digital RMB holdings—to synergize with the PBOC’s CBDC pilot reforms. Second, issuers must establish robust compliance mechanisms covering risk identification, asset segregation and custody, and internal controls. They must fulfill compliance obligations toward direct customers and actively collaborate to expand application scenarios for RMB stablecoins, aligning effectively with key FTZ reform objectives. Third, drawing on the “electronic fence” feature of the Shanghai FTZ’s FT accounts, innovative technical standards and smart contract designs should ensure that during the pilot phase, holders and users of RMB stablecoins are largely restricted to specific qualified institutions, enterprises, or individuals.

Simultaneously, for offshore RMB stablecoins (CNH Coin, CNHC), Model One could involve cross-border institutions jointly setting up an RMB stablecoin issuer in Hong Kong, while Model Two might allow selected mainland-authorized banks or payment institutions to utilize their Hong Kong-registered legal entities to mint and issue offshore RMB stablecoins, complying fully with local regulations. This would form a dual RMB stablecoin system across mainland and offshore markets. By referencing existing cross-border payment and capital flow arrangements between the mainland and Hong Kong, mechanisms for exchanging and interconnecting CNYC and CNHC could be explored. In the short term, CNYC would mainly enhance efficiency in cross-border trade and business settlements, whereas CNHC aims to further strengthen Hong Kong’s role in RMB internationalization and can be used compliantly in on-chain financial activities and commodity transactions—particularly in supporting RWA (Real-World Assets) based on RMB-denominated assets—jointly boosting the global influence of the RMB and RMB-denominated assets.

Furthermore, regulators and stablecoin issuers across jurisdictions must cooperate closely to continuously promote intelligent technological innovations, effectively identifying secondary market activities of RMB stablecoins within blockchain ecosystems—especially monitoring cases where non-qualified mainland entities hold RMB stablecoins—to prevent illicit fund flows and misuse for illegal purposes.

Of course, as highlighted by the Bank for International Settlements (BIS), stablecoins still fall short in three critical dimensions: singleness, elasticity, and integrity. Thus, exploration of RMB stablecoin reforms must proceed cautiously—with strict risk control, gradual progress, and moderate scale—while accelerating related legislative work to strengthen China’s voice in global legal debates over stablecoins. Looking ahead, we may also draw inspiration from the BIS-proposed concept of a "Financial Internet" (Finternet) based on a Unified Ledger, promoting coordinated, complementary, and mutually beneficial development among digital RMB, tokenized bank deposits, and stablecoins.