China’s Digital Yuan to Become Interest-Bearing Under New 2026 Framework

The Chinese central bank will allow commercial banks to pay interest on verified digital yuan wallet balances under a new framework taking effect on January 1, 2026.

This move comes as authorities intensified regulatory enforcement on the crypto industry in late 2025, targeting Bitcoin mining activities and real-world asset (RWA) tokenization.

Interest Payments to Become Part of China’s Digital Yuan From 2026

Lu Lei, a deputy governor of the People’s Bank of China (PBoC), noted that this initiative will transform the digital yuan’s (e-CNY) role from digital cash to digital deposit money.

Unlike cryptocurrencies that operate on distributed ledgers, the digital yuan uses a hybrid architecture under strict government control. This approach prioritizes scalability, regulatory oversight, and operational efficiency, not full decentralization.

“The central bank sets rules and standards and operates core infrastructure, while commercial banks open wallets, ensure security, provide payment services, bear compliance responsibilities, and bring digital yuan under deposit insurance. Non-bank payment institutions provide digital renminbi exchanged from customers’ bank deposits and are subject to full reserve management,” the governor wrote.

The change is outlined in a newly released action plan. Lei noted that the new system reflects lessons learned from nearly a decade of research and pilot programs.

By introducing interest-bearing digital yuan wallets, China aims to increase adoption while preserving financial stability and central bank control.

“Standing at a new starting point, the digital yuan, based on the two-tier structure, will continue to uphold principles while innovating, serving the real economy, effectively preventing risks, and steadily advancing from digital cash and electronic payments toward digital currency and digital payments, injecting technological momentum into the building of a strong currency and laying a modern monetary foundation for a strong financial country,” the translation reads.

Usage data suggests the asset has gained substantial traction. Lei highlighted that as of the end of November 2025, the digital yuan had processed 3.48 billion transactions. The cumulative value was 16.7 trillion yuan ($2.38 trillion).

The multi-CBDC bridge (mBridge) processed 4,047 cross-border payments with a cumulative value equivalent to 387.2 billion yuan ($54.21 billion). Of these, transactions in digital yuan accounted for about 95.3%.

China’s Crackdown on Crypto

Meanwhile, China’s move to further advance its CBDC comes amid its restrictive approach toward cryptocurrencies. On December 16, officials shut down more than 400,000 Bitcoin miners in Xinjiang. The crackdown affected the network’s hash rate, given the country’s mining dominance.

Despite a 2021 mining ban, China accounted for about 14% of global Bitcoin hashrate as of October 2025. However, December’s sweeping shutdown showed authorities’ resolve to uphold the ban.

Earlier this month, seven leading Chinese financial associations jointly issued a warning. This prohibits institutions from participating in real-world asset tokenization.

The central bank has also raised concerns about stablecoins. The PBoC noted that they do not meet the required standards for customer identification and anti-money laundering safeguards.

According to regulators, these shortcomings increase the risk of stablecoins being used for money laundering, illicit fundraising, and unauthorized cross-border capital flows.

China’s combination of interest-bearing digital yuan innovation and severe crypto bans reflects a strategy to defend monetary authority and financial control. Whether this approach boosts CBDC adoption while curbing unregulated crypto activity remains to be seen as the 2026 framework launches.