Kazakhstan's debut of the Yuan stable-coin

China has introduced the world’s first regulated offshore yuan-linked stablecoin in Kazakhstan this month as part of its plan to use blockchain technology for cross-border trade. According to Yang Guang, the chief technology officer of Shanghai-based Conflux, which helped with the launch, the event may have seemed modest but could create a “butterfly effect” with the potential to transform international payments.

On September 17, Hong Kong-based fintech company AnchorX introduced AxCNH, a cryptocurrency pegged to the offshore Chinese yuan. The project uses blockchain technology developed by Conflux and was launched after AnchorX obtained a license in Kazakhstan, the largest economy in Central Asia. This marks the debut of the first regulated offshore yuan-linked stablecoin, highlighting China’s growing ambition to expand the international use of its currency.

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The launch of AxCNH is more than just a financial experiment. It reflects Beijing’s broader strategy to reduce the U.S. dollar’s dominance in international trade and the cryptocurrency market. By promoting yuan-backed digital assets, China aims to strengthen the role of its currency in cross-border transactions. This effort complements other initiatives, such as the rollout of the central bank digital yuan, and signals a multi-pronged approach to yuan internationalization.

Stablecoins like AxCNH are designed to maintain a fixed value, making them more reliable for everyday transactions compared to highly volatile cryptocurrencies like Bitcoin. According to reports, China is also considering allowing the use of yuan-backed stablecoins on a wider scale for the first time. If implemented, this could encourage greater global adoption of the yuan, potentially reshaping the landscape of cross-border payments and providing a digital alternative to dollar-denominated assets.

China has long wanted the yuan to become a true global currency, in line with its status as the world’s second-largest economy. But strict capital controls and massive annual trade surpluses have slowed progress toward that goal.

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Yang, a computer scientist from Tsinghua University, told Reuters that as U.S. dollar-backed stablecoins expand, it is hard to imagine a future digital world in which the Chinese yuan has no presence on blockchains. He argued that issuing offshore yuan stablecoins would not technically require approval from China’s central bank and added that Beijing would likely support such efforts if they were aimed at facilitating cross-border trade.

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Stablecoins are cryptocurrencies pegged to fiat currencies and seen as efficient, low-cost tools for cross-border payments.
China is pushing to expand the yuan’s global use, especially through blockchain projects tied to the Belt and Road Initiative (BRI).
Conflux has a government mandate to build a blockchain platform for BRI countries.
Hong Kong has a regulatory framework for stablecoins but has not yet issued any licenses; mainland China has banned crypto trading since 2021.
AnchorX’s yuan-linked stablecoin is positioned as a cost-effective alternative to traditional finance, aiming to boost cross-border transactions between BRI nations and offshore Chinese entities.

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The company, supported by Conflux and Chinese investment firm Hony Capital, launched the yuan-linked stablecoin after securing approval from financial regulators in Kazakhstan, a Belt and Road Initiative (BRI) member state and China’s largest trading partner.

According to Augustine Fan, head of insights at digital asset trading platform SignalPlus, this initiative provides China with another channel to promote the offshore yuan. He noted that it also reflects the government’s positive outlook on the potential of blockchain technology, while regulators are expected to adopt a measured and cautious stance in overseeing such developments.