Author: Wang Yang
On January 1, 2026, the digital renminbi officially upgraded to version 2.0. This upgrade transforms the digital renminbi from M0 cash into deposit currency, starts accruing interest, and grants operational rights to commercial banks. Shortly after, on the evening of February 6, the People’s Bank of China, the China Securities Regulatory Commission, and eight other ministries issued the "Notice on Further Preventing and Managing Risks Related to Virtual Currencies" (hereinafter referred to as the "Notice"), reiterating the prohibition of virtual currency business activities in mainland China while leaving room for the compliant development of tokenization of real-world assets (RWA). At the same time, the China Securities Regulatory Commission issued the "Regulatory Guidelines for the Offshore Issuance of Asset-Backed Security Tokens Based on Domestic Assets" (hereinafter referred to as the "Regulatory Guidelines"), establishing rules and opening pathways for the issuance of RWA from domestic assets abroad.
This series of seemingly independent policy actions is, in fact, interconnected and anticipative. The policies related to RWA may seem unrelated to the upgrade of the digital renminbi, but they create conditions for building an effective cycle of digital renminbi and present a historic opportunity for Hong Kong to become the offshore digital renminbi market and a core node linking China with the world in the dual circulation of digital renminbi.
The digital renminbi 2.0 "integrates various digital technologies such as digital currency strings, smart contracts, and blockchain, enabling the digital renminbi to transition from electronic payment to the digital payment era." On December 29, 2025, Lu Lei, a member of the Party Committee and Vice President of the People’s Bank of China, published an article titled "Upholding Principles and Innovating to Steadily Develop Digital Renminbi" (hereinafter referred to as "Lu's Article") in the mainland's Financial Times.
If we liken the technological foundation of the digital renminbi to a uniquely Chinese "blockchain," then digital renminbi 2.0 signifies not just an upgrade in currency form but also a "quasi-blockchain" restructuring of China's financial infrastructure. Furthermore, "digital assets" and RWA play a critical leveraging role in facilitating the effective circulation of the digital renminbi.
01 Internal Circulation: Financial Assets Gradually Enter the "On-Chain" Trading Era
In mainland China, digital renminbi 2.0 means that the financial industry will gradually migrate to "on-chain" operations under the central bank.
First, the fundamental financial services of deposits and loans will be "on-chain." With the upgrade of digital renminbi to a deposit currency and its inclusion in commercial bank liabilities, it means that commercial banks' deposits, loans, and remittances (payments) can be fully "on-chain" and entirely "digitized." There are no longer any barriers to practical interests among the parties.
Second, financial assets can also be "on-chain." Besides the fundamental services of deposits and loans, financial assets will gradually shift "on-chain," as the international operational center for digital renminbi has established a "digital asset" platform, where "digital assets" can be understood as the "digitalization of assets" and the "digitalization of transaction settlements." There are still few existing cases, but some preliminary attempts have been made, such as the digital renminbi financial bond issued by Huaxia Bank's leading issuance.
Shortly before the publication of "Lu's Article," in early December 2025, Huaxia Bank successfully issued 4.5 billion yuan of financial bonds (second phase) for Huaxia Financial Leasing Co., utilizing an industry-first innovative model of "Blockchain Bookkeeping + Digital Renminbi Collection." In this case, blockchain solved the problem of information asymmetry in traditional issuance, while raised funds were collected via digital renminbi, eliminating multiple clearing steps.
This case illustrates that the financial market can rebuild and innovate based on digital currency infrastructure, not just for bonds but also for stocks, funds, and derivatives. When financial assets are fully "on-chain," we will have an "on-chain" financial ecosystem characterized by information symmetry, real-time settlement, and low costs. Of course, this is a gradual process.
Moreover, within the aforementioned "Notice," one phrase provides imaginative space for the domestic version of RWA: "Activities related to tokenization of real-world assets conducted within the territory...should be prohibited; exceptions are made for relevant business activities relying on specific financial infrastructure with the approval of relevant regulatory authorities." Will the digital asset platform of the digital renminbi international operational center become a "specific financial infrastructure" at the appropriate time?
02 External Circulation: Hong Kong's Digital Asset Market Expands the Renminbi Asset Base
In the current global upheaval of the payment and settlement system, particularly with the explosion of stablecoins and digital assets, how the digital renminbi achieves "external circulation" is also receiving attention, perhaps even more than internal circulation.
In terms of cross-border payment and settlement, the Multilateral Central Bank Digital Currency Bridge (mBridge) explores a novel international payment system based on central bank digital currency. Meanwhile, Hong Kong's rapidly developing digital asset market may become the core engine for the circulation of digital renminbi overseas. The most important aspect of the digital renminbi circulating abroad is its integration into efficient financial markets. The emerging digital asset market provides the best starting point for the new digital renminbi.
Within Hong Kong's digital asset market, the digital renminbi has tentatively participated in settlements. The Hong Kong SAR government announced in November 2025 the successful pricing of approximately 10 billion HKD equivalent of digital green bonds under the sustainable bond program, encompassing HKD, RMB, USD, and EUR, with 2.5 billion in RMB. The primary issuance of HKD and RMB bonds features traditional settlement methods alongside what is among the first global digital bonds utilizing digital renminbi and digital HKD in settlement procedures.
In the Ensemble sandbox experiment, RWA compliance issuance based on domestic renminbi assets has been successfully realized (e.g., Longxin Group and Xunying Travel cross-border RWA, etc.); at the same time, RWA projects based on offshore renminbi assets have also been issued (e.g., Huaxia renminbi digital currency fund).
The "Regulatory Guidelines" released by the China Securities Regulatory Commission provide an opportunity for compliance of domestic renminbi assets to issue RWA overseas. Hong Kong is the optimal market to host domestic asset RWA. With regulatory adaptation and market development, a larger scale of renminbi assets will have the opportunity to issue digital assets in the Hong Kong market, expanding the offshore circulation of renminbi assets and providing diversified investment options for overseas digital renminbi. Naturally, the settlement currency would be the digital renminbi.
As the scale of assets circulating overseas in digital renminbi increases and the variety of assets diversifies, it creates conditions for the issuance of offshore renminbi stablecoins at the right time. From a developmental perspective, stablecoins will become one of the important usage habits for offshore market users, while offshore renminbi stablecoins are one of the future options in the internationalization process of the renminbi. The digital renminbi deposits and digital renminbi liquid assets provide the necessary reserve assets for offshore renminbi stablecoins.
The "Notice" states, "Without approval from relevant departments in accordance with laws and regulations, no units or individuals within or outside the territory may issue stablecoins pegged to the renminbi abroad." Though it is a prohibitive regulation, it provides advantageous geopolitical conditions for Hong Kong to develop digital renminbi business at the right moment in the future.
Based on the "digitized" circulation of renminbi assets, the digital renminbi settlement network, and offshore renminbi stablecoins, Hong Kong will become a new type of global offshore renminbi center, providing efficient markets and tools for the value creation and liquidity management of offshore digital renminbi, broadening the application scenarios for digital renminbi and enhancing the willingness to hold offshore digital renminbi.
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