From The East Is Red, July 2:
CASS economist calls for prompt stablecoin legislation and phased rollout of “long-arm jurisdiction” for cryptocurrencies in Web3 finance regulation.
This is the third in a series of articles to explore the ongoing discussions surrounding stablecoins in China, written by Yang Tao, Deputy Director of the National Institution for Finance & Development, formerly the Financial Laboratory of the Chinese Academy of Social Sciences (CASS). In 2015, the NIFD and 25 other institutes were highlighted as the first batch of “state high-end think tanks,” where it is the only one specialising in finance.
Yang recommends that China prioritise the development of a yuan-backed stablecoin to secure a foothold in the global market for fiat-collateralised stablecoins. Over the medium and long term, he calls for the formulation of comprehensive laws regulating the broader cryptocurrency ecosystem. Yang also advocates a tiered, phased approach to establishing China’s extraterritorial regulatory reach—or “long-arm jurisdiction”—in the realm of Web3 finance.
The article was originally published on 21st Century Business Herald, a business newspaper in China, on June 14. It is also accessible on the National Institution for Finance & Development’s official website and WeChat blog.
杨涛：理解人民币稳定币的理论与实践逻辑
Yang Tao: Understanding the Theoretical and Practical Logic of Yuan-Backed Stablecoins
The recent passage of the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025) by the U.S. Senate, Hong Kong’s Legislative Council approval of the Stablecoins Bill, and the listing of stablecoin giant Circle on the New York Stock Exchange have reinvigorated global and domestic debates around stablecoins. To grasp the impact and strategic significance of stablecoins—whether in the context of competition in the international monetary system or the integration of traditional finance with Web3 innovations—one must first understand their underlying theoretical and practical logic.
Fiat-collateralised stablecoins: integrating into the sovereign credit system
Throughout history, currency has evolved from shells and precious metals to modern forms of credit money. While it serves multiple functions—a medium of exchange, a unit of account, a store of value, and a standard of deferred payment—its fundamental role has always been to act as a promise and a medium for settling transactions.
With the rise of the electronic and digital age, new payment methods have emerged, following two distinct paths: "account-based" and "value-based (Token)." The former primarily relies on the traditional banking system, with identity verification as its core. In contrast, the value-based model may depart from the banking system, evolving from early non-bank electronic wallets into a new "Token-based" model. The focus is no longer on identity verification but on valuation and anti-counterfeiting measures.
In the development of the "Token-based" system, fully decentralised cryptocurrencies like Bitcoin have shown instability in their value. As a result, their role as assets gradually outweighs their currency functions, making them unsuitable for anchoring payments. This has prompted the emergence of various stablecoins, including fiat-collateralised stablecoins, cryptocurrency-collateralised stablecoins, commodity-collateralised stablecoins, and algorithmic stablecoins....
....MUCH MORE
China is really into claiming universal jurisdiction for their national laws. Here's a prior instance, July 2020 for an ostensibly Hong Kong focused law:
....The law also applies to everyone everywhere in the world. This means if one were to be seen by Beijing as breaking this new legislation in another country and then enter Hong Kong, or transit through it, or even fly in a vehicle registered in Hong Kong, then one would be at risk. Possibly this could even apply to residing in a country with an extradition treaty with Hong Kong (or one day, China?). In short, it is a very large, sharp Sword of Damocles....
It’s not the substantive crimes and their definitions that count; it’s the institutions that will investigate, prosecute, and judge them that count. Language matters only if there are institutions that will make it matter. This whole law is about avoiding the involvement of such institutions.
Everyone is doing their hot take on the new Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region (the “Nat Sec Law” or the “Law”) [Chinese | English], just revealed to the public and made effective today (consultation? schmonsultation!), so why not me?
Two things first:
All right, let’s begin.
- As these are just quick notes, I’m going to comment on the various parts of the law pretty much in the order they appear instead of in a more organized way.
- An important point: I’m not going to talk much about the substantive offenses and their definitions. There’s a reason for that. If mainland practice to date is any guide—and it is—then the definitions don’t matter that much. Anything can be stretched as necessary to cover something done by the person being targeted. As the old cliché goes, 欲加之罪何患无辞 (roughly, “if you are determined to convict, you needn’t worry about the lack of grounds”). The key is in the institutions and procedures the law establishes and empowers. Who has power to do what? What are the procedures under which they operate? Who appoints and pays for them? To whom are they responsible? Etc.
Article 2 begins with a weird provision stating that nobody may violate the rules of Article 1 and Article 12 of the Hong Kong Basic Law. But Article 1 and Article 12 of the Basic Law aren’t rules about anything. Article 1 states a proposition, not a rule: “The Hong Kong Special Administrative Region is an inalienable part of the People’s Republic of China.” How could one “violate” that statement? Article 12 is grammatically the same: ” The Hong Kong Special Administrative Region shall be a local administrative region of the People’s Republic of China, which shall enjoy a high degree of autonomy and come directly under the Central People’s Government.” Again, how does one “violate” a proposition?
Article 4 says that Hong Kong should protect rights under the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social, and Cultural Rights. Given the rest of the law, whether this will happen seems unlikely.
Article 5 states that all persons shall be considered innocent until declared guilty by a judicial organ. As we shall see, this is contradicted by the bail provisions in Article 42.
Article 6 says that protecting the country’s sovereignty, unity, and territorial integrity is the common duty of all the people (renmin 人民) of China. This seems an odd formulation to me. Why not say all the citizens (gongmin 公民) of China? “People” in PRC officialese has a special meaning: it is a subset of the citizenry, and consists of those who are allies of the Communist Party at any given moment. It would be odd to say that reactionaries and counterrevolutionaries, who are not part of the people, get a pass on this duty.
Article 12 calls for the establishment of a Committee for Safeguarding National Security (the “National Security Committee” or the “Committee”), said to be under the supervision of and accountable to the Central People’s Government (the “CPG”), i.e., the State Council and the Premier.
It’s not quite clear how this accountability is to work in practice, since the membership is prescribed by law: the Chief Secretary for Administration, the Financial Secretary, the Secretary for Justice, the Secretary for Security, the Commissioner of Police, the head of the department for safeguarding national security of the Hong Kong Police Force established under Article 16 of this Law (the “Nat Sec Head”), the Director of Immigration, the Commissioner of Customs and Excise, and the Director of the Chief Executive’s Office. (To understand where all these fit within Hong Kong’s administrative structure, check out this handy chart. I’ll just note here that they are not all of equal rank. The Nat Sec Head, for example, is under the Commissioner of Police, who is under the Secretary for Security, who is under the Chief Secretary for Administration.) The Committee is to be chaired by the Chief Executive.....MUCH MORE
Finally, more on that universal jurisdiction (tweet disappeared but she was right):
Oh my god am I reading this right???
Article 38: The law applies to persons who do NOT have permanent resident status in HK and commit crimes under this law OUTSIDE Hong Kong.
Did Beijing just grant itself sweeping extraterritoriality to...everyone on the planet?— B. Allen-Ebrahimian (@BethanyAllenEbr) June 30, 2020
Here's Bethany:
Head of China investigations @aspi_cts. Was @axios @foreignpolicy @yale
@HopkinsNanjing. Author BEIJING RULES, FT Best Books 2023. bethanyallen AT aspi org au
https://x.com/BethanyAllenEbr/
