China has made a major move in digital finance by launching a yuan-linked stablecoin called AxCNH in Kazakhstan. Issued on the Conflux blockchain, this stablecoin supports China’s ongoing plan to expand the global use of the yuan through blockchain-based financial products.
Why Kazakhstan? China’s Strategic Choice
Kazakhstan is a crucial partner for China in various sectors:
- Trade
- Energy supplies
- Logistics
- Blockchain collaboration
- The Belt and Road Initiative (BRI)
But beyond that, China chose Kazakhstan due to:
1. High Crypto & Blockchain Adoption
Kazakhstan is one of the leading countries in crypto mining and blockchain infrastructure.
2. Strong Trade Relationship
The two nations exchange billions of dollars in goods each year, making trade settlement an important factor.
3. Crypto-Friendly Regulation
The Astana International Financial Centre (AIFC) provides one of the most progressive crypto regulatory frameworks in Asia.
4. Perfect Testing Market
Kazakhstan serves as a pilot nation before China expands the stablecoin across:
- Central Asia
- Middle East
- Africa
- Southeast Asia
How China’s Yuan-Backed Stablecoin (AxCNH) Works
A licensed company issues AxCNH backed by real yuan (CNH) reserves stored offshore.
Working Mechanism
- The user deposits yuan (CNH) or equivalent funds.
- The issuer mints AxCNH tokens on the Conflux blockchain.
- Users can transfer, trade, or use AxCNH for payments.
- Upon redemption, AxCNH is burned.
- The original yuan is returned to the user.
Use Cases of AxCNH Stablecoin
1. Cross-Border Trade Payments
Businesses trading with China can settle payments using AxCNH instead of SWIFT, reducing:
- Bank fees
- Settlement time
- Cross-border delays
2. Remittances
Workers from Central Asia can send money instantly with lower fees.
3. Forex Hedging
Companies can hold digital yuan for easier currency management.
4. E-Commerce Payments
Global merchants sourcing goods from China get faster invoice settlements.
5. Blockchain Finance & DeFi
AxCNH can be used in:
- DeFi protocols
- Smart contracts
- Tokenized assets
- On-chain settlements
Global Financial Impact
1. Boosting Globalization of Yuan
The biggest challenge for the yuan has been global adoption. A blockchain-based stablecoin bypasses:
- SWIFT
- Dollar-dominated systems
- International banking barriers
2. Competing with USDT
Tether’s USDT is the world’s largest stablecoin. AxCNH offers:
- A government-friendly alternative
- Asian trade-focused usage
- State-backed blockchain support
3. Supporting Belt and Road Countries
BRI nations benefit from cheaper, faster, blockchain-powered payments.
4. Rise of National Stablecoins
China is setting a new dual model:
- CBDC (e-CNY) for domestic use
- Stablecoin (AxCNH) for international markets
