China to Introduce Interest-Bearing Digital Yuan by 2026
China to Implement Interest-Bearing Digital Yuan in 2026
The People's Bank of China (PBoC) will enable commercial banks to offer interest on digital yuan wallet balances starting January 1, 2026.
This development follows intensified regulatory measures against the crypto sector in late 2025, with a focus on Bitcoin mining and real-world asset tokenization.
Digital Yuan Evolution
Lu Lei, PBoC's deputy governor, indicated that the digital yuan's transition from digital cash to digital deposit money marks a significant step. The digital yuan's hybrid system, under governmental oversight, prioritizes scalability and efficiency over decentralization.
"The central bank sets the framework and operates core infrastructure, while commercial banks manage wallets, security, and compliance. Non-bank institutions facilitate digital renminbi exchanges, adhering to full reserve management," the governor explained.
The initiative, outlined in a new action plan, reflects insights gained from extensive research and pilot programs. The interest-bearing feature aims to enhance digital yuan adoption while maintaining financial stability and central bank control.
"The digital yuan will continue to innovate within a two-tier structure, supporting the economy, preventing risks, and advancing towards digital currency integration," the plan states.
As of November 2025, the digital yuan had processed 3.48 billion transactions worth 16.7 trillion yuan ($2.38 trillion). The mBridge project processed 4,047 cross-border payments totaling 387.2 billion yuan ($54.21 billion), with digital yuan accounting for 95.3%.
China's Crypto Crackdown
China's CBDC advancements occur alongside a stringent stance on cryptocurrencies. In December, authorities shut down over 400,000 Bitcoin miners, significantly impacting the network's hash rate. Despite a 2021 mining ban, China represented about 14% of global Bitcoin hash rate by October 2025.
Seven Chinese financial associations recently issued warnings against institutional involvement in real-world asset tokenization. Additionally, the PBoC criticized stablecoins for lacking adequate customer identification and anti-money laundering measures, posing risks of misuse.
China's strategy combines digital yuan innovation with strict crypto regulations to maintain monetary control. The effectiveness of this approach in boosting CBDC adoption and curbing unregulated crypto activity will become clearer with the 2026 framework's implementation.