China is cracking down on yuan stablecoins abroad

China has announced new strict measures for companies active in the world of crypto and digital assets. The Chinese central bank and seven other regulators now ban the issuance of stablecoins linked to the yuan outside China unless explicit permission has been granted.

The message is clear. Anything resembling a “digital yuan” that Beijing has no direct control over is seen as a risk.

China further tightens crypto rules

In a joint statement, the People’s Bank of China and several regulators say that companies with a Chinese background will no longer be allowed to issue digital tokens abroad unless this has been approved in advance. That ban applies not only to companies within China, but also to foreign entities owned by Chinese companies.

According to the authorities, these types of structures pose risks to financial stability and supervision. They fear that Chinese companies will still remain active on the international crypto market through foreign constructions.

Ban on yuan-pegged stablecoins

What is striking is the clear ban on stablecoins linked to the Chinese yuan and issued outside the mainland. Both institutions and individuals may only launch a so-called yuan stablecoin with Beijing’s permission.

Chinese regulators warn that such coins could undermine monetary policy. They would weaken controls on financial flows and exchange rates, which goes against the central authority that Beijing wants to maintain.

Signal to the global crypto market

China has been taking a hard line towards crypto for years. Trading and mining of Bitcoin (BTC), for example, are largely prohibited. With this step, Beijing makes it clear that international routes should not offer a way out.

The decision is likely to have limited direct consequences for the broader crypto market. Major cryptocurrencies largely operate outside of China. However, it is a clear signal to projects that focus on tokenization and digital currencies with a link to national currencies.

At the same time, China continues to bet on the digital yuan, a state-issued digital currency that is fully controlled by the central bank and fits within Beijing’s vision of the future of money.