Recent reports highlight a growing concern about stablecoins in China as their potential impact on financial stability is coming under scrutiny. Experts warn that even fully backed stablecoins could exacerbate financial instability and increase dollarization risks. This has led to regulatory action, including halting promotional activities around stablecoins by Chinese authorities in mainland China. In Hong Kong, however, the focus is shifting towards regulated innovation with the passage of legislation allowing licensed entities to issue fiat-backed tokens, paving the way for yuan-denominated stablecoin development. The global stablecoin market continues to grow, with a projected surge in value to reach $1.8 trillion by 2028. This development raises questions about how China’s financial policy will shape the future of digital currency and its role in global finance.