China’s Offshore Yuan (CNH) Stablecoins: How They’re Reshaping DeFi and Global Trade

In the past year, the offshore yuan (CNH) stablecoin market has become one of the most closely watched frontiers in global crypto. The launch of AxCNH by AnchorX in Kazakhstan, with key partners like Lenovo and Conflux, marked a pivotal moment: for the first time, a regulated CNH-pegged stablecoin was live outside mainland China, signaling Beijing’s willingness to experiment with digital currency internationalization via blockchain. Yet, as is often the case with financial innovation in China, this story is as much about regulatory choreography as it is about technology.

From Tech Ambition to Regulatory Reality

Early 2025 saw an extraordinary push from Chinese tech giants. JD. com and Ant Group lobbied Beijing for permission to issue yuan-backed stablecoins out of Hong Kong, aiming to challenge the dominance of USD-based tokens in DeFi and cross-border trade settlements. Their goal was clear: expand yuan’s reach into decentralized finance, leveraging non-USD stablecoins as a tool for monetary influence.

This momentum led to rapid proof-of-concept launches. AnchorX’s AxCNH debuted in Kazakhstan on September 17,2025, using Conflux Network as its blockchain backbone and receiving regulatory clearance from local authorities. The initiative was lauded as a cornerstone for China’s Belt and Road ambitions in digital finance.

However, by October 2025, Beijing’s mood shifted. The People’s Bank of China (PBOC) and Cyberspace Administration (CAC) directed major firms to halt their stablecoin projects over concerns about private sector control undermining state oversight. JD. com and Ant Group paused their plans; Hong Kong authorities clarified that no official approval had been granted for any offshore yuan-pegged token.

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The Quiet Power of Experimentation: Conflux Network’s Approach

Despite regulatory caution at the national level, experimentation continues at the fringes. Conflux Network received tacit approval to pilot offshore CNH stablecoins with a cap of 300 million yuan (roughly US$42 million) by year-end 2025. This measured approach reflects China’s characteristic duality: encouraging innovation that advances strategic goals while keeping tight reins on systemic risk.

Why does this matter? For one, it lets China test how a blockchain-based yuan could function in global finance without directly exposing its domestic financial system or ceding control to private actors. Second, it offers DeFi protocols like dForce a new instrument for cross-border settlements, potentially bypassing SWIFT friction points or dollar-centric liquidity pools.

Why CNH Stablecoins Matter for DeFi, and Beyond

The emergence of regulated offshore yuan stablecoins offers unique advantages over their USD counterparts:

Diversification: For DeFi users seeking alternatives beyond dollar exposure, especially amid rising US-China tensions, CNH tokens provide new hedging options.
Trade Settlement: Chinese exporters can now settle invoices in digital CNH directly on-chain, reducing conversion costs and speeding up cross-border payments.
Regulatory Experimentation: By launching pilots outside mainland China (as seen with Kazakhstan), authorities can observe real-world adoption while containing potential risks.

The integration of AxCNH into dForce is particularly notable, it signals that yuan-backed liquidity pools may soon be available alongside euro- or yen-stablecoin pairs, creating new arbitrage dynamics across Asia-focused DeFi platforms.

Yet, the landscape remains fluid. While the State Council’s risk-averse stance has curtailed large-scale private initiatives, smaller pilots like Conflux’s CNH stablecoin persist as a kind of regulatory litmus test. The question is not whether yuan-backed stablecoins will play a role in global DeFi and trade, but rather how China will shape the rules of engagement: and who gets to participate.

For Chinese policymakers, these offshore experiments serve dual purposes: projecting soft power in digital finance while safeguarding capital controls at home. The fact that AxCNH and similar tokens are issued offshore, outside the reach of domestic monetary policy but still under Beijing’s watchful eye, underscores this delicate balance.

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The Road Ahead: Global Implications and Investor Takeaways

What does this mean for international investors and DeFi builders? First, the emergence of CNH stablecoins is fragmenting what was once a USD-dominated stablecoin ecosystem. This trend is likely to accelerate as more jurisdictions experiment with non-USD-pegged tokens, whether euro, yen, or yuan. For traders, this means new arbitrage opportunities and FX risk strategies within on-chain protocols. For treasuries and exporters operating along Belt and Road corridors, it opens up direct digital settlement rails denominated in their preferred currency.

But uncertainty abounds. Regulatory signals from Beijing can shift quickly; what is permitted today may be paused tomorrow. As seen in October 2025, even well-connected tech giants are not immune to sudden policy reversals. Investors should watch pilot programs like Conflux’s closely, they are bellwethers for how far China will allow decentralized yuan liquidity to grow before pulling back on the reins.

The next phase could see more nuanced collaborations between state-linked fintechs and public blockchains abroad. AnchorX’s partnerships with industrial heavyweights like Lenovo hint at an emerging model: use regulated offshore entities as sandboxes for digital yuan innovation while keeping ultimate control centralized.

CNH Stablecoins: Navigating Innovation, Regulation, and Opportunity

How do CNH stablecoins differ from China’s e-CNY digital currency?▲

CNH stablecoins—like AxCNH—are pegged to the offshore Chinese yuan (CNH) and typically issued by private entities on public blockchains, enabling use in DeFi and cross-border trade. In contrast, e-CNY is China’s official central bank digital currency (CBDC), tightly regulated, and intended for domestic retail payments. While e-CNY is centralized and state-controlled, CNH stablecoins operate more flexibly in international markets, though under evolving regulatory scrutiny.

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What are the main risks for DeFi users engaging with CNH stablecoins?▲

DeFi users face several risks when using CNH stablecoins. Regulatory uncertainty is significant, as Chinese authorities have shown both support and caution, recently instructing tech giants to pause stablecoin initiatives. Counterparty risk exists if the issuer cannot maintain the 1:1 CNH peg. Additionally, liquidity limitations and potential cross-border compliance challenges could impact trading and redemption. Staying informed about the latest regulatory updates is crucial for risk management.

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How can traders and investors access CNH stablecoins like AxCNH?▲

Traders can access CNH stablecoins such as AxCNH primarily through DeFi protocols and select centralized exchanges that support these assets. For example, dForce is moving to integrate AxCNH, expanding its accessibility for cross-border DeFi transactions. However, due to regulatory caution, availability may be limited and subject to change. Always verify the legitimacy of the platform and ensure compliance with local regulations before trading.

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Why are CNH stablecoins considered important for global trade and DeFi?▲

CNH stablecoins offer a unique bridge between traditional finance and decentralized systems, allowing for seamless, real-time cross-border transactions denominated in yuan. This supports China’s ambition to internationalize its currency and provides traders with alternatives to USD-dominated stablecoins. Their use in DeFi protocols can also enhance liquidity and diversify risk, though regulatory developments continue to shape their global impact.

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What recent regulatory developments have impacted CNH stablecoins?▲

In late 2025, Chinese regulators instructed major tech firms to halt stablecoin projects, reflecting concerns over private sector influence on digital currency. However, platforms like Conflux received tacit approval to trial offshore yuan stablecoins, signaling a nuanced approach. The regulatory landscape remains fluid, and future participation in CNH stablecoins will depend on ongoing policy decisions balancing innovation with state control.

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Will Offshore Yuan Stablecoins Reshape Global Trade?

The answer depends on regulatory patience, and market uptake. If China continues to cautiously greenlight cross-border pilots while maintaining strict oversight domestically, CNH stablecoins could become a quiet but powerful force in Asia-Europe trade corridors and global DeFi protocols alike.

For those following the evolution of non-USD stablecoins in Asia, this is a moment to watch closely. The story of CNH-pegged tokens is not just about technology or even monetary ambition; it’s about how one nation negotiates its place at the intersection of innovation and control. For deeper analysis on China’s digital yuan strategy beyond its borders, visit our ongoing coverage at China’s Push for Yuan Internationalization via Crypto.