——A Discussion with Wang Yongli
Zhu Weisha, December 6, 2025
I. Halting Stablecoins: A Necessary Crisis Management Measure
Halting Bitcoin mining could perhaps be attributed to “lack of clarity.” However, it is difficult to explain the current halt on stablecoins with the same “lack of clarity.” The policymakers’ understanding of China’s current economic situation and the global landscape cannot be said to be shallow.
The real issue is this: the Chinese economy has reached a critical and perilous juncture.
Three charts speak louder than three thousand words (Data source: Compiled from PBOC, financial yearbooks, and listed company disclosures, processed by Grok):
Chart 1 shows that between 2023 and 2024, total bank deposits surged from 152 trillion yuan to 302 trillion yuan, nearly doubling within a year, and are projected to rise further to around 330 trillion yuan in 2025. Deposit data, stemming from rigid accounting practices, is nearly impossible to falsify. However, GDP maintained its growth trend during the same period. This contradictory phenomenon merits deep reflection and leads us to examine credit dynamics.
The amount on the vertical axis is expressed in trillion yuan, while the horizontal axis represents years. Blue represents GDP, while orange represents the total amount of deposits.
Chart 2 contrasts the trends of GDP and new bank loans from 2005 to 2024. Over the past two decades, they have been highly positively correlated (Pearson coefficient of 0.96). However, after 2024, the curves show a rare divergence—new loans declined, while GDP continued to rise. This deviation from long-term patterns indicates that deep-seated structural changes are underway.
The amount on the vertical axis is expressed in trillion yuan, while the horizontal axis represents years. Blue represents GDP, while orange represents new loans.
Chart 3 reveals the contraction on the household side: In October 2025, new household loans recorded -360.4 billion yuan, marking the largest net repayment for any single month since records began in 2007, resembling a “cliff-like” drop. Despite mortgage interest rates falling to historic lows (around 2.5%), the household sector continues to make net repayments, showing a reluctance to increase leverage.
The orange color below the horizontal axis represents loan repayments.
These three charts collectively point to a stark reality: confidence among households and businesses is severely lacking. Funds prefer to remain idle within the banking system rather than being invested, consumed, or used to increase debt.
Against this backdrop, any capital outflow channel that is not subject to capital controls and possesses high liquidity—stablecoins being a prime example—could become the proverbial “last straw that breaks the camel’s back” for banking system liquidity. If a capital outflow wave similar to that of 2015-2016 were triggered, the consequences would be far more severe than back then. Today, both the foreign exchange reserve buffer and the window for renminbi internationalization have significantly narrowed.
Therefore, the short-term “blocking” is a crisis response born of necessity, not stemming from strategic confidence.
“Blocking” is necessary, but it must not become a long-term strategy. A temporary injection of “adrenaline” cannot replace a systematic treatment plan. Contemplating these three charts is enough to send a chill down one’s spine. The tides of history are mighty, and financial policymakers stand upon a volcano’s rim.
II. Hong Kong: The Critical Breakthrough and Feasible Path
Mr. Wang Yongli’s argument is not wrong in itself, but it overlooks the unique role of Hong Kong.
The Hong Kong dollar is, in essence, the world’s most successful fiat-backed stablecoin for the US dollar, having operated for over forty years. Leveraging the linked exchange rate system, if Hong Kong were to utilize its platform to issue compliant, 1:1 USD-pegged digital stablecoins, and effectively utilize the mainland residents’ annual USD $50,000 foreign exchange purchase quota, it could completely compete, within a regulatory framework, with USDT and USDC for globally held crypto-assets by the ethnic Chinese community (which holds over 50% of the industry’s wealth). This move would not only generate seigniorage and grasp pricing power but could also guide a portion of overseas US dollars to return compliantly, converting into real foreign exchange inflows for the mainland.
Of course, while the “Hong Kong-issued USD stablecoin” path possesses unique advantages, it also faces complex challenges such as cross-border regulatory coordination, refined capital account management, and geopolitical factors. However, this is not a fantasy; it is currently the most actionable competitive path—at the very least, a realistic strategy aiming for a “small loss.” For detailed analysis, please refer to the “Market Commentary” section on the Chainless website.
III. US Stablecoin Legislation is Crude but Directionally Correct; Hong Kong May Yet Surpass
I have previously pointed out three major issues in their framework, the most prominent being the fragmentation of issuers and the lack of a unified naming standard, which constitutes an institutional weakness. The US needs to establish an institution similar to the Hong Kong Monetary Authority to undertake liquidity regulation and credit backstopping functions. However, coordination problems between US administrative and regulatory agencies have led to a lack of a foundational credit mechanism. If the Federal Reserve is completely bypassed, there is a lack of ultimate risk backstop arrangements.
Nevertheless, these are problems of development, not errors in direction.
In contrast, the design of Hong Kong’s progressing “Stablecoin Ordinance” appears more rigorous and operable in areas such as issuer licensing, reserve asset regulation, and redemption mechanisms. If Hong Kong can take the lead launch a high-quality US dollar stablecoin, it might just surpass others. This is because it is best positioned to systematically resolve the core dilemmas in stablecoin issuance at an institutional level.
Stablecoins will ultimately move towards full compliance. Guided by a legislative framework, the US mainstream financial system will rapidly embrace stablecoins. As long as China continues to participate in global trade, this channel will be difficult to completely block. In fact, Bitcoin hasn’t been entirely blocked either, with China’s Bitcoin mining hash rate still accounting for about 13% globally.
IV. The Truly Lethal Threat is “Opacity,” Not Legislation
The truly lethal backlash has never been transparent legislation, but rather long-term, opaque, and reckless growth. USDT has been operating for 11 years, and the vast majority of its risks have long been exposed. Legislation based on practical experience, even if initially flawed, is far safer than allowing the unchecked expansion of “black box stablecoins.” It must also be pointed out that the design models of some current Central Bank Digital Currencies (CBDCs) indeed have significant limitations in terms of system transparency and public oversight mechanisms.
A major historical contribution of cryptocurrency has been to push financial transparency to unprecedented heights. Effective future regulation should not simply pull on-chain assets back into an industrial-era licensing framework. Instead, it should use “on-chain transparency” as the regulatory baseline, supplemented by necessary liquidity support and lender-of-last-resort mechanisms.
V. The Biggest Fallacy: Understanding the “Internet of Value” with a “Tool Internet” Mindset
A core concept needs clarification here. The biggest current cognitive fallacy lies in still attempting to understand the concept of the “Internet of Value” with a “Tool Internet” mindset. If the Internet of Value is understood merely as “transferring value,” that is not accurate—doesn’t Alipay transfer value?
The concept of the “Internet of Value” was proposed precisely to draw a clear line distinguishing it from how traditional finance uses the internet. Its core characteristics manifest in four fundamental differences:
- Different Ownership of Asset Control: In traditional finance, funds are stored in centralized facilities like banks. In the Internet of Value, assets are stored in user-held wallets, enabling direct control over assets, akin to holding cash.
- Different System Boundaries: The boundary of traditional finance is the sovereign state, while the boundary of the Internet of Value is the global network. This poses a completely new challenge for establishing a globalized, adaptable regulatory framework.
- Different Ledger Properties: The underlying ledger of the Internet of Value can achieve a combination of anonymity and transparency in transactions.
- Different Currency Evolution: The traditional world features a multitude of currencies, while the Internet of Value may follow network effects, eventually converging towards a few global oligopolistic currencies.
Once these four points are recognized, it becomes clear that the prevailing mainstream CBDC design is fundamentally misaligned with the logic of the Internet of Value.
Hong Kong issuing a US dollar stablecoin leverages existing systems and its own advantages to “cling to the mainstream and secure a share.” Insisting on the CBDC path could lead to marginalization in the future global competition of digital finance.
China still has the possibility to turn the tide. By fully utilizing Hong Kong’s institutional advantages, the mainland’s vast user base, and its engineer dividend, it is entirely possible to actively choose among different outcomes—”small loss, no loss, or even big win.” The prerequisite is a sober recognition: the future of digital currency does not lie in replicating the old system’s CBDC, but in building a globally competitive stablecoin that aligns with the logic of the Internet of Value.
Conclusion
What is most scarce today is not another prohibition, but a strategic blueprint as clear, consensus-building, and steadily implementable as the reform and opening-up or the commercialization of housing.
In key fields such as artificial intelligence, cryptocurrency, and advanced manufacturing, China has shifted from being an early parallel runner or even leader to a follower. If we continue to apply industrial-era control mindsets to the financial paradigm revolution of the information age, we will pay a enormous long-term price for it.
Blocking is an act of desperation, but it cannot become a permanent excuse to evade transformation.
The real way out lies in orderly opening up, not relentless blocking; in proactive engagement, not passive defense.
History has repeatedly proven: in the face of technological waves, the ultimate gains of active embracers will always far exceed those of passive defenders.
