• Hong Kong’s stablecoin legislation will permit the Chinese language authorities to check crypto laws beneath the supervision of the HKMA.
• China is increasing e-CNY and exploring renminbi-denominated tokens whereas sustaining its crypto ban in 2021.
• The US GENIUS Act will encourage the Chinese language authorities to modernize its digital asset coverage via Hong Kong.

Mainland China continues to implement the 2021 Cryptocurrency Ban, which outlaws all digital foreign money transactions, as set out by the Folks’s Financial institution of China (PBOC) in a September 24, 2021 notification.

The ban ended China’s long-standing dominance of mining and alternate actions, but in addition gave the Chinese language authorities full management over what digital asset improvements may legally happen.

4 years later, regulators are nonetheless counting on that authorized basis, permitting experimentation solely via regional carve-outs the place they’ll monitor.

Hong Kong implements stablecoin ordinance beneath HKMA license

Hong Kong has taken the alternative path and launched a stablecoin issuer regime beneath the Stablecoin Ordinance, efficient August 1, 2025. The HKMA has begun licensing Fiat Reference Stablecoin (FRS) issuers, steering has been printed within the Official Gazette and the appliance window has opened to market contributors. These steps created a monitored route for issuance, redemption, provisioning, and AML management.

Associated: Hong Kong unveils new stablecoin licensing legislation at China-ASEAN Discussion board

By turning stablecoins right into a regulated asset class, Hong Kong has given banks and fintech corporations a compliant path to subject digital tokens backed by fiat reserves. The transfer successfully opens a door that the Chinese language authorities has saved closed to the mainland. That door remains to be intently monitored by the Chinese language authorities.

Coverage Sandbox for China’s Digital Asset Experiments

This distinction has made Hong Kong a coverage sandbox for the Chinese language authorities. Analysts pointed to the town’s function as a managed venue to check the issuance of licensed stablecoins whereas the mainland ban continues. The deal will permit policymakers to think about compliance knowledge, operational dangers and cross-border fee frictions earlier than deciding to change to the mainland.

Selling e-CNY and financial sovereignty

In the meantime, the Folks’s Financial institution continues to concentrate on the nation’s central financial institution digital foreign money, the digital renminbi. In June 2025, officers introduced plans to increase the worldwide use of the digital yuan to assist a “multipolar financial system.”

This aim is straight tied to China’s want to counter US greenback dominance and scale back its dependence on foreign currency echange. For the Chinese language authorities, the digital renminbi stays a state-approved avenue for digital funds, which is the primary cause why the cryptocurrency ban stays in place.

Conclusion: Hong Kong leads, China watches

Hong Kong’s stablecoin legislation provides China a safe window into digital asset regulation.

HKMA License Issuer. The central financial institution will look at the information. And the digital renminbi stays the Chinese language authorities’s major instrument of financial sovereignty.

The GENIUS Act abroad and the PlusToken legacy at dwelling kind the sting of that experiment. If the sandbox is profitable, Hong Kong’s mannequin may turn into a blueprint for China’s managed cryptocurrency integration, which might permit the Chinese language authorities to watch each transaction with out lifting the ban.

Associated: Chinese language digital foreign money revival? Jiuzy plans $1 billion funding in Bitcoin, Ethereum, BNB