China's Tech Giants Push for Yuan-Backed Stablecoin to Challenge USDT Dominance

Two of China's leading technology companies, JD.com and Ant Group (an Alibaba affiliate), are reportedly urging the People's Bank of China (PBOC) to authorize a yuan-denominated stablecoin in Hong Kong, according to Reuters sources. This strategic move aims to counter the growing supremacy of U.S. dollar-pegged stablecoins like USDT in global digital payments and bolster the yuan's international standing. Both firms are preparing to launch Hong Kong dollar-backed stablecoins when the region's new cryptocurrency regulations take effect August 1, but argue this isn't sufficient for promoting yuan globalization since the HKD itself is pegged to the USD. With over 99% of circulating stablecoins currently dollar-backed (per Bank for International Settlements data) and Chinese merchants increasingly adopting USDT for cross-border transactions to bypass capital controls, industry leaders warn the yuan is losing ground. SWIFT data shows the Chinese currency accounted for just 2.89% of global payments in May, compared to the dollar's 48% share. While China maintains mainland crypto restrictions, Hong Kong's progressive regulatory framework may provide a testing ground for yuan digital assets without violating domestic policies. Financial experts suggest this initiative represents China's attempt to secure a position in the evolving digital finance landscape, where U.S. regulatory advances are accelerating dollar stablecoin adoption.