The bond was auctioned off to holders of the digital yuan, a central bank digital currency (CBDC) developed by the Chinese government.
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Hua Xia Bank, a publicly traded financial institution linked to China’s government, issued 4.5 billion yuan ($600 million) in tokenized bonds on Wednesday, aiming to reduce clearing friction by removing intermediaries from the auction process.
According to , the onchain government bonds were issued by Hua Xia Financial Leasing, a subsidiary of Hua Xia Bank, a state-controlled commercial bank in China. The bonds offered a three-year fixed yield of 1.84% to holders.
The $600 million bond tranche was auctioned off exclusively to holders of , also known as the digital yuan.
Tokenized bonds may needed for transaction clearing, shortening settlement times and lowering transaction costs.
China has flip-flopped on the issue of stablecoins and cryptocurrencies in 2025, choosing instead to develop a (CBDC) and state-sanctioned uses of permissioned blockchain technology, as digital assets become geostrategically important.
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China’s government continues to change course on stablecoins and cryptocurrencies, alternating between attempted bans and relaxing regulations to allow private companies to operate in the space.
In early August, China cracked down on local brokers and financial companies holding stablecoin seminars in the country and instructed these businesses to and to stop publishing research on the subject.
At the time, Chinese regulators were concerned that stablecoins could be a vector for fraudulent activity in the country, according to .
Less than two weeks later, emerged that China’s government was considering to boost the fiat currency’s presence in foreign exchange markets.
Chinese technology companies, including Alibaba, Ant Group and JD.com, saw this as a green light to begin developing yuan-pegged tokens, but a about private stablecoins put those plans on pause.
The People’s Bank of China, the country’s central bank, for the digital yuan in September. The hub, based in Shanghai, will oversee cross-border settlement and development of other blockchain-related initiatives.
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