People's Bank of China Recommends Yuan-Pegged Stablecoin

An independent researcher from the People's Bank of China argued that China must increase its research efforts in the stablecoin space and support upcoming companies that are exploring a yuan-pegged cryptocurrency.

Titled "A Brief Analysis of Stablecoins," the report points out the recent launches of stablecoins like Paxos Standard and Gemini Dollar, which are pegged to the U.S. dollar and have shown great promise as a concept.

The report expresses caution over the global implications of a USD-pegged stablecoin, arguing it could increase the dominance of the dollar in the global economy and have an adverse effect on fiat currencies issued by other major economies.

Liangsong highlighted the need to "Double down" on stablecoin research and development efforts if their USD counterparts show promise, are recognized and prove their use in the traditional economy.

He adds China should support domestic institutions, presumably Chinese crypto startups, to develop and issue yuan-pegged stablecoins.

The report pointed out stablecoin could present a threat to central institutions if they scale as much as fiat currencies.

In the authors' opinion, fiat currency could back stablecoins as collateral, instead of oil and gold, and never end up in the market circulation.

Taking his chance at the report's suggestions, Star Xu, founder of OKEx -the world's third-largest crypto-exchange by daily traded volume, stated on a Weibo post that his company is open to issuing a regulated stablecoin.

Xu did not mention if the coin will be collateralized by the yuan while stressing the exchange's U.S. subsidiary, OKCoin U.S. would carry out this development.

He believes the "Trend of issuing a Chinese yuan stablecoin is inevitable. And OKCoin USA will participate in rolling out a regulated stablecoin."