Exploring the Development Model of Renminbi Stablecoin

Recently, with the impending implementation of stablecoin regulations in a certain region, the topic of stablecoins has once again sparked heated discussions. The development of emerging technologies such as blockchain and distributed ledgers has driven the vigorous growth of central bank digital currencies and stablecoins, while also posing significant challenges to financial regulation.

Traditionally, offshore renminbi business is divided into two categories: overseas and domestic. The overseas business mainly focuses on certain international financial centers, while the domestic business achieves conditional capital flow through specific account management mechanisms. Some viewpoints suggest that offshore renminbi stablecoins should first be piloted in overseas markets, and once conditions are ripe, exploration should take place in specific regions within the domestic market.

However, Web3.0-based stablecoins have transcended the traditional boundaries of offshore and onshore. To better achieve strategic planning, proactive regulation, and collaborative advancement, we recommend adopting a development model for RMB stablecoins that links domestic and foreign markets. This model has several advantages: first, in the face of the rapid development of USD-backed stablecoins and global regulatory trends, our country needs to proactively study and respond from the perspectives of financial security and monetary sovereignty; second, the scale of a single offshore market may struggle to support RMB stablecoins in achieving economies of scale; finally, the regulation of stablecoins involves multiple cutting-edge areas such as identity verification and anti-money laundering, requiring relevant central departments to play a leading role and coordinate with regional regulatory agencies.

We can consider promoting the innovative exploration of the RMB stablecoin simultaneously in a domestic free trade pilot zone and abroad. For the onshore offshore RMB stablecoin (CNYC), two models can be adopted: first, establishing a stablecoin issuance institution in the free trade zone by multiple parties to explore on-chain issuance and operational mechanisms; second, directly minting and operating the stablecoin through branches of existing digital currency operating institutions in the free trade zone. Regardless of the model adopted, it is necessary to simultaneously meet the requirements of sufficient asset reserves,完善风险管理, and rich application scenarios.

For offshore Renminbi stablecoins (CNHC), it is possible to promote domestic and foreign institutions to jointly initiate stablecoin issuance institutions in certain regions, or to allow authorized domestic institutions to issue stablecoins through their foreign legal entities. This can form a dual Renminbi stablecoin system both domestically and internationally, and explore the exchange and interoperability mechanisms between the two. CNYC is mainly used to enhance the settlement efficiency of cross-border trade and business activities, while CNHC is dedicated to strengthening the position of the Renminbi in the process of internationalization and supporting the tokenization of real-world assets (RWA) based on Renminbi assets.

It is worth noting that regulatory authorities and stablecoin issuers need to work together to continuously promote technological innovation in intelligence, effectively monitor the secondary market activities of stablecoins, and prevent illegal fund flows and usage. At the same time, the exploration of the RMB stablecoin should strictly control risks, proceed gradually, and maintain an appropriate scale, while quickly promoting the formulation of relevant laws and regulations.

Looking to the future, we can draw on the "Financial Internet" concept proposed by the Bank for International Settlements, promoting the collaborative development of digital RMB, tokenized bank deposits, and stablecoins based on a unified ledger, achieving complementary win-win outcomes.