China Bans Stablecoins in Push for Stronger Monetary Control

Beijing has just clarified its position in a radical way. The People’s Bank of China formally bans the issuance of stablecoins backed by the yuan and tokenized assets, for both Chinese and foreign companies. A red line now established.

The finishing blow against private stablecoins

The decision announced Friday by the People’s Bank of China (PBOC) leaves no room for ambiguity. From now on, “No unit or individual at home or abroad may issue RMB-linked stablecoins without the consent of relevant departments.” This joint statement, signed notably by the Ministry of Industry and the Securities Regulatory Commission, marks a definitive turning point.

Winston Ma, professor at New York University School of Law and former director of the Chinese sovereign wealth fund CIC, analyzes this ban as the final step of a multi-year project.

The objective? Keep cryptocurrencies away from the official financial system while actively promoting the e-CNY, the state-controlled digital yuan. This strategy reveals a clear intention: Beijing wants no competition against its own digital currency.

The ban covers both the onshore yuan (CNY) and its offshore version (CNH), the latter allowing some flexibility in international forex markets. By blocking any private stablecoin initiative, China consolidates its monetary monopoly and strengthens its financial sovereignty against American giants in the sector such as Tether or Circle.

From hesitation to total ban

The path taken by Beijing has not been linear. Last August, rumors spoke of a possible opening allowing private companies to issue stablecoins backed by the yuan. This potential turnaround would have marked a historic break with the ultra-restrictive policy pursued for years. But the euphoria was short-lived.

By September, the Chinese government backtracked, requiring issuers to suspend or stop their pilot projects “until further notice.” This back-and-forth illustrates internal tensions within the regime between financial innovation and maintaining state control. Ultimately, the second option prevailed, unsurprisingly.

To make its digital yuan more attractive, Beijing played a trump card in January 2026. Commercial banks are now allowed to pay interest on e-CNY wallets. This measure aims to attract savers and investors who might be tempted by yields offered elsewhere, notably in DeFi or via private stablecoins.

This retreat strategy could be costly for China in the long term. While dollar stablecoins dominate digital international trade, Beijing cuts itself off from a booming segment. The ban also slows down the tokenization of assets, a promising sector to modernize financial markets. It remains to be seen if the digital yuan will be enough to fill this gap.