February 02, 2026
Blockwind News’ Editor-in-Chief Tsering Namgyal had a chat with Angela Yan, a partner at YaoWang Law offices in Shanghai, an allied law firm for Greater China of Simmons & Simmons on the future of the stablecoin industry
Q: What is China’s regulatory philosophy toward stablecoins, and how does its “risk-prevention-first” approach differ from other major economies?
A: Chinese regulators have traditionally taken a very cautious approach to financial innovation. China’s stock market, for instance, only began in 1990, making it relatively young. Since then, authorities have been careful with most new financial products, including investment funds.
A key reason is the structure of the investor base. China has a very large number of retail investors from diverse educational and financial backgrounds. Protecting these individual investors is a central regulatory priority.
In traditional finance, regulators emphasise investor suitability. This means financial institutions must assess whether investors understand the risks involved. However, this kind of protection is difficult to apply to cryptocurrencies and stablecoins, given their anonymity and decentralised nature. That difficulty is a major reason behind China’s cautious regulatory stance.
Q: Stablecoin transactions reached $33 trillion in 2025 and are growing rapidly. How do Chinese authorities view this development?
A:At present, stablecoin transactions are classified as illegal financial activities in mainland China. This clearly distinguishes China from most other major economies.
That said, developments in 2025 suggest a more nuanced approach. In May, Hong Kong introduced its stablecoin bill. Shortly afterwards, in June, the e-CNY infrastructure was further developed through the Shanghai asset centre. Viewed together, these moves suggest that China has not closed the door entirely to global stablecoin developments but has instead opened a limited and controlled channel.
Hong Kong functions as a pilot zone with its own regulatory framework. At the same time, mainland authorities place strong confidence in the future of the e-CNY. While it is still unclear how—or if—the Hong Kong stablecoin regime and the e-CNY system will eventually connect, there may be opportunities for the two systems to interface in the future.
Q: Are Chinese companies or financial institutions accessing stablecoins indirectly, for example through Hong Kong or overseas entities?
A: PRC law prohibits both direct and indirect investment in stablecoins. However, many Chinese companies—particularly payment firms and large technology groups—are keenly interested in this sector.
To participate, they typically establish offshore entities that are clearly segregated from their mainland parent companies. The objective is to prevent any financial or regulatory risk from spilling back into China.
Within Hong Kong’s stablecoin sandbox, we already see participation from Chinese payment companies, technology firms and e-commerce giants. There are legal ways to engage, but company structures must be designed carefully so as to ensure that they are operating within the boundaries set under PRC regulations and there are no spillover risks back into the mainland.
Q: Is there a conflict between stablecoins and the e-CNY? Where do you see this heading?
A: Chinese authorities have strong confidence in the e-CNY, which has been under development for several years. That said, the future will depend largely on international adoption.
Like any currency or payment system, success depends on whether other countries are willing to accept and integrate it. If the global system increasingly relies on US dollar-backed stablecoins, and China promotes an e-CNY backed by legal tender, outcomes will depend on how international markets respond.
Historically, China has been pragmatic in its economic policy. If a system works, it will be expanded; if not, alternatives will be considered. Hong Kong is likely to remain a testing ground, allowing authorities to protect mainland investors while exploring potential links between different systems.
Q: Could stablecoins or crypto innovations be introduced in other pilot zones such as Shanghai, Shenzhen or Hainan?
A: This would be challenging. While China often uses pilot zones to test new financial policies, Hong Kong is fundamentally different from mainland cities.
Shanghai, Shenzhen and other mainland zones all use the renminbi as legal tender and are deeply integrated with the national financial system. Hong Kong, by contrast, has its own currency and an established exchange mechanism between the Hong Kong dollar and the renminbi. This makes it uniquely suited for testing stablecoin-related innovations without risking spillover effects into the mainland economy.
For this reason, I do not see any immediate prospect of similar experiments in mainland cities.
Q: Which overseas regulatory developments is China watching most closely?
A: China is closely monitoring regulatory developments in jurisdictions such as the EU, the United States, Hong Kong, Singapore and Japan. Last year, former central bank governor Zhou Xiaochuan explicitly referenced these frameworks in a speech on stablecoins.
That said, China cannot simply copy foreign regulatory models. Financial markets in these jurisdictions tend to be more mature, and their population size and investor profiles differ significantly from China’s. Chinese regulators are studying global developments closely but are likely to pursue a framework tailored to domestic conditions.
Q: How do foreign companies view the Chinese market?
A: Foreign firms remain cautious about mainland China, particularly in crypto and stablecoins, given the clear classification of these activities as illegal.
One practical option is to operate through Hong Kong by obtaining local licences and participating within its regulatory framework. Another is to observe the development of the e-CNY. While its future trajectory remains uncertain, opportunities may emerge in areas such as payment infrastructure and related services.
Q: Despite the ban, many Chinese retail investors still participate in crypto markets. What is your view as a dispute lawyer?
A: In practice, we see many individuals attempting to invest through informal or underground channels. Because there are no legal platforms, these investors are highly vulnerable to fraud.
Many fall victim to illegal schemes claiming to facilitate investments in USDT or USDC. These transactions are illegal under Chinese civil law and are not legally protected. If investors lose money, Chinese courts will not recognise or enforce claims arising from such activities.My advice to retail investors is clear: there is currently no legal avenue for crypto or stablecoin investment in mainland China, and anyone offering such services should be treated with extreme caution.
