China Challenges Stablecoin Reliability, Emphasizes Sovereign Currency

China is expressing concerns over the reliability of USD-pegged stablecoins, urging caution and emphasizing the strategic importance of the RMB in digital currency development.

Guan Tao, head economist at BOC Securities, addressed stablecoin concerns during the China Macroeconomic Forum seminar. His stance discourages haste in adopting USD-pegged stablecoins, spotlighting the strategic importance of the RMB. Guan Tao emphasized, “The US dollar stablecoin is not the legal tender of the United States and lacks the guarantee of sovereign credit. For stablecoins, we can take a ‘wait-and-see’ attitude, and there is no need to rush, and there is no need to ‘myth’ or ‘superstitious’ stablecoins. We should maintain the strategic determination to develop digital currency and promote the internationalization of the RMB.”

China Questions USD-Pegged Stablecoins’ Reliability

Guan Tao, head economist at BOC Securities, addressed stablecoin concerns during the China Macroeconomic Forum seminar. His stance discourages haste in adopting USD-pegged stablecoins, spotlighting the strategic importance of the RMB. Guan Tao emphasized, “The US dollar stablecoin is not the legal tender of the United States and lacks the guarantee of sovereign credit. For stablecoins, we can take a ‘wait-and-see’ attitude, and there is no need to rush, and there is no need to ‘myth’ or ‘superstitious’ stablecoins. We should maintain the strategic determination to develop digital currency and promote the internationalization of the RMB.”

Guan’s insights underscore the pivotal debate over digital currency’s role in financial systems, as nations weigh emerging risks against sovereignty needs.

Community sentiment remains divided. Many support digital RMB’s growth and prioritize it over foreign stablecoins, illustrating China’s preference for regulated, state-backed digital currencies that uphold monetary control.

Stablecoin Regulation and China’s Digital Currency Push

Did you know? The concept of stablecoins emerged to provide a less volatile alternative to cryptocurrencies, bridging the gap between fiat and digital assets.

Guan Tao highlighted potential pitfalls of US dollar stablecoins, noting their lack of US sovereign backing. The absence of such assurance renders them unreliable substitutes for government-issued money. Caution was advised, urging a measured approach to these digital tokens, to avoid treating them as substitutes for legal tender. Stablecoins might not endure regulatory challenges, risking market oligopoly where most issuers cannot survive due to diminishing profit margins. China emphasizes developing its currency over USD-pegged coins.

Guan’s insights underscore the pivotal debate over digital currency’s role in financial systems, as nations weigh emerging risks against sovereignty needs.