Jack Paul 
China’s Entry into the Stablecoin Arena
Reports are emerging that China might be preparing to support yuan-pegged stablecoins for international trade. This comes as the US has been pushing dollar-pegged stablecoins through legislation like the GENIUS Act passed in July. The timing suggests we could be seeing the beginning of a new kind of monetary competition between the two economic giants.
What’s particularly interesting is how this could reshape cross-border payments. If China moves forward with this approach, it would represent a significant shift in how they approach digital currency on the global stage.
The AxCNH Stablecoin Launch
China recently launched what appears to be the world’s first regulated offshore yuan-pegged stablecoin. Called AxCNH, this cryptocurrency is pegged to the offshore yuan and received approval from Kazakhstan’s financial authorities. The Layer-1 blockchain project Conflux participated in the launch, according to their CTO Yang Guang.
The stablecoin aims to internationalize the yuan and improve cross-border payment efficiency among countries involved in China’s Belt and Road Initiative. That’s a massive network of over 150 countries where China has invested more than $1.3 trillion in infrastructure and development projects.
I think the Belt and Road connection is crucial here. This isn’t just about creating another stablecoin – it’s about building financial infrastructure that supports China’s broader economic strategy.
Geopolitical Implications
There’s also the matter of dollar-based sanctions. By creating yuan-denominated alternatives for cross-border payments, countries might have more options to avoid potential US sanctions. This could be particularly appealing for nations that want to maintain trade relationships with countries that face US sanctions.
The issuer of AxCNH is AnchorX, a Hong Kong fintech firm that industry insiders suspect has significant Chinese government influence. Meanwhile, Conflux, which provides the underlying technology, is one of the few public blockchains with official Chinese government approval.
It’s worth noting that Conflux reportedly handles over 3,000 transactions per second. That’s not the highest throughput in the blockchain space, but it’s certainly respectable for handling cross-border payments.
Market Impact and Future Outlook
This development comes as the stablecoin market has been growing rapidly. When the US GENIUS Act passed in July, the global stablecoin market cap stood at $267.2 billion. By Monday, it had reached $309.4 billion – a 15.8% increase in just over 70 days.
China’s entry into this space could accelerate that growth even further. We might be looking at a situation where both major economic powers are actively promoting their own stablecoin ecosystems.
What remains unclear is how quickly other countries will adopt yuan-pegged stablecoins for trade. The infrastructure exists through the Belt and Road network, but adoption will depend on many factors including trust in the peg, regulatory acceptance, and practical utility.
Perhaps we’re witnessing the early stages of a new chapter in digital currency competition. It’s not just about which blockchain technology wins, but which national currencies become dominant in the digital realm.