China – e‑CNY & Crypto Regime

Since February 2026, a company in China may not use the words “stablecoin”, “crypto-asset” or “RWA” in its name or its registered business scope. That is what a notice from eight authorities says, among them the People's Bank of China (PBoC). Five weeks earlier, the same central bank had rebuilt its own digital money. Since 1 January 2026, e‑CNY held in a commercial bank's wallet is an interest-bearing deposit.

For stablecoins, the authorities give the reason themselves. A stablecoin pegged to a national currency, they argue, takes over some functions of legal tender in disguise and so touches monetary sovereignty. This article describes how China organises its digital money, what is prohibited on the mainland, what Hong Kong permits and where the mBridge payment project stands. It reflects the position in September 2026. It is written for companies that manufacture in China, buy there or run a subsidiary there.

From Digital Cash to a Deposit

The e‑CNY is the PBoC's digital money. The central bank does not hand it to citizens and companies itself. Between them stand authorised operators, mostly commercial banks, which open wallets and process payments. The official news agency Xinhua published the details of the change on 29 December 2025 (report, in Chinese). It based them on information from the PBoC. According to the report, e‑CNY in a commercial bank's wallet is an account-based liability of that bank. The PBoC itself speaks of a move from the era of digital cash into the era of digital deposit money.

For a wallet holder this has three consequences. The bank pays interest on balances in wallets registered under a real name, following the arrangements that apply to deposit rates. Deposit insurance protects the balances to the same extent as a deposit. And the bank may use the balances in its own balance sheet management. In return, they count towards the base for its minimum reserve. Payment institutions without a banking licence that also offer e‑CNY must back it at 100 per cent.

A balance in a bank wallet therefore no longer matches what our glossary means by a central bank digital currency (CBDC). There, a CBDC is money issued directly by a central bank. Since January 2026, an e‑CNY balance with a bank is that bank's money. For a company this means its claim is against the bank that runs the wallet, not against the PBoC.

The figures in the same report show how widely the e‑CNY is used, as of the end of November 2025. In total, 3.48 billion payments worth 16.7 trillion yuan had been processed. Through the e‑CNY app, 230 million personal wallets had been opened, plus 18.84 million wallets for companies and other organisations. According to the report, the e‑CNY is used in trade, in health care and education, in public services and in cross-border settlement, among other areas. The report does not break down which companies use it for what.

What Notice No. 42 Prohibits on the Mainland

On 6 February 2026, the PBoC and seven other authorities published notice Yinfa [2026] No. 42. It has applied since the day of publication and repeals the predecessor rule from 2021. At its core is a classification: virtual currencies do not have the legal status of legal tender and must not circulate as money. As examples, the notice names Bitcoin, Ether and Tether, and so includes a stablecoin. Business involving virtual currencies is a prohibited financial activity on the mainland. This includes, among other things, exchanging them for legal tender or for other virtual currencies, trading as a central counterparty, intermediation and pricing services, and issuing tokens to raise funds.

The notice reaches beyond the mainland. Providers from outside may not unlawfully offer such services in any form to companies and individuals on the mainland. Without the consent of the competent authorities, no one may issue a stablecoin pegged to the renminbi outside the mainland, wherever the issuer comes from. Mainland companies and the entities outside the mainland they control may not issue other virtual currencies there without consent either.

For companies with a subsidiary on the mainland, three further rules matter. Financial institutions, including payment institutions, may not open accounts, transfer funds or provide clearing and settlement for business involving virtual currencies. Companies and individuals on the mainland are liable if they assist a provider from outside while knowing, or when they should know, that it operates there unlawfully. And anyone investing in virtual currencies risks a void legal transaction if it violates public order and good morals. The investor then bears the loss.

Besides virtual currencies, the notice covers the tokenisation of real-world assets (RWA). This means turning ownership or income rights in an asset into tokens using cryptography and distributed ledger technology (DLT), then issuing and trading them. On the mainland this is prohibited. The exception is business that the competent supervisor has approved and that runs on specified financial infrastructure. If a mainland company tokenises rights in assets in China outside the mainland, it needs consent or a filing, depending on the form. The competent authorities include the securities regulator, the China Securities Regulatory Commission (CSRC), and the foreign exchange authority.

Position in September 2026: Notice No. 42 is published in this version on the PBoC's website. It has no transition period.

Hong Kong Grants Licences Under Its Own Law

Hong Kong has its own monetary authority, the Hong Kong Monetary Authority (HKMA), and regulates stablecoins in its own legislation. The Stablecoins Ordinance has applied since 1 August 2025. Since then, anyone issuing stablecoins in Hong Kong that reference a fiat currency needs a licence from the HKMA. The authority deliberately set the bar high. In August 2025, its Chief Executive Eddie Yue announced that only a handful of licences would be granted at first, although the HKMA had been in contact with dozens of interested parties.

On 10 April 2026, the HKMA granted the first two licences, to The Hongkong and Shanghai Banking Corporation (HSBC) and to Anchorpoint Financial Limited. According to their business plans, both intended to launch in the following months. In September 2026, the HKMA register still lists exactly these two issuers. Whether they have already issued tokens cannot be seen from the register.

The licence is a permission under Hong Kong law. Notice No. 42 does not mention Hong Kong and contains no exemption for stablecoins licensed there. Its features of a virtual currency relate to the issuer and the technology: issued by a body that is not a monetary authority, using cryptography and DLT or similar technology, existing in digital form. Supervision of the issuer does not appear among these features.

In the other direction, the e‑CNY reaches into Hong Kong. Hong Kong residents can set up a personal e‑CNY wallet and top it up through the local Faster Payment System (FPS). They can use it to pay at retailers in the pilot cities on the mainland, while person-to-person transfers are excluded. The HKMA does not describe any offer for companies.

mBridge After the BIS Stepped Back

The Bank for International Settlements (BIS) describes mBridge as a platform shared by several central banks for cross-border payments in digital central bank money. From 2021 it was developed by the BIS Innovation Hub together with the HKMA, the Bank of Thailand, the Central Bank of the United Arab Emirates and the PBoC's Digital Currency Institute. The Saudi Central Bank joined in 2024. The BIS named lower costs, more speed and simpler processes as aims. This also applies to countries from which correspondent banks are withdrawing.

The platform runs on a purpose-built blockchain, the mBridge Ledger. Commercial banks use it to settle payments and foreign exchange transactions directly with each other. Each of the four founding central banks has set up a node that validates transactions, and the steering committee has created its own rulebook. In mid-2024, mBridge reached the stage of a first usable version, the minimum viable product. This version allows payments with real money, subject to each jurisdiction's readiness.

In October 2024, the BIS announced that it was handing the project over to the participating central banks. Its website lists the project as concluded. At that time, the observers included the European Central Bank, the Banque de France, the Banca d'Italia and the Banque centrale du Luxembourg. The Deutsche Bundesbank, the Oesterreichische Nationalbank and the Swiss National Bank are not on that list.

Figures on usage have since come from the Chinese side. According to the Xinhua report, 4,047 cross-border payments worth the equivalent of 387.2 billion yuan had been processed by the end of November 2025. About 95.3 per cent of the volume was in e‑CNY. In September 2025, an international operations centre for the e‑CNY also started work in Shanghai. It was set up and is run by the PBoC's Digital Currency Institute. It operates platforms for cross-border payments, for blockchain services and for digital assets.

Three Requests to a Component Supplier

A supplier of drive technology from Franconia manufactures through a subsidiary in Jiangsu province. It serves its customers in Southeast Asia through a trading company in Hong Kong. Within one quarter, three requests reach the finance team in Germany. A Chinese customer of the subsidiary wants to pay in e‑CNY. A customer of the Hong Kong company offers a stablecoin from a licensed issuer. And a supplier of castings on the mainland asks for an invoice to be paid in Tether to a wallet outside China.

The first request stays within the mainland and within the banking system. For the subsidiary's treasury, an e‑CNY balance has resembled a deposit since January 2026: an interest-bearing claim against the bank, covered by deposit insurance. What remains open is whether the subsidiary's house bank offers wallets for companies and how their transactions arrive in the bank statement and the ERP system. Only the bank itself can answer that.

The second request plays out in Hong Kong alone. The HKMA licence concerns the issuer, not the recipient. How the trading company holds such a balance safely is described in Custody & Safekeeping. How stablecoins work economically is explained in Stablecoin Fundamentals.

The third request is the delicate one. Whether a payment by a German company to a wallet outside China counts as prohibited business is not expressly stated in the wording. The liability rule for assisting providers from outside is addressed to companies and individuals on the mainland. The rule on void transactions concerns investments, not the payment of an invoice. The tangible risk therefore lies in the supply chain. A supplier who insists on this route settles in a unit that, under the notice, must not circulate as money. There is also the risk of a rule change. Eight authorities jointly rewrote the framework in February 2026, without a transition period.

Access Runs Through the Bank

Since January 2026, banks on the mainland have had their own commercial interest in the e‑CNY. They pay interest on the balances and may use them in their balance sheet like deposits. For private stablecoins, Notice No. 42 names no permitted route onto the mainland, including none via a licence from Hong Kong. Across borders, according to the PBoC, around 95 per cent of the volume on mBridge runs in e‑CNY. Competition for digital money on the mainland thus takes place among the authorised operators, above all the banks, using the central bank's product. For a German company, the route to digital money in China therefore runs through its own subsidiary's Chinese house bank. Anyone discussing wallets, terms and the connection to their ERP system with that bank has, since January 2026, been negotiating with a provider that earns money on the e‑CNY itself.