China Weighs Yuan-Backed Stablecoins in Major Policy Shift

China is considering introducing yuan-backed stablecoins for the first time, signaling a dramatic change in its stance on digital assets, according to people familiar with the matter, as reported by Reuters. The move is part of Beijing’s broader push to strengthen the global role of the Chinese currency and catch up with U.S. progress in the stablecoin market.

State Council to Review Roadmap

Later this month, the State Council—China’s cabinet— is expected to review a roadmap aimed at boosting yuan usage worldwide. The plan will include:

• Adoption targets for the yuan in global markets.
• Responsibilities of domestic regulators, including the People’s Bank of China (PBOC).
• Risk-prevention guidelines to manage financial stability concerns.

China’s top leadership will also convene for a high-level study session on yuan internationalisation and the role of stablecoins, which are increasingly viewed as a key financial innovation in global payments.

From Crypto Ban to Stablecoin Exploration

If approved, the initiative would represent a major reversal of China’s 2021 ban on cryptocurrency trading and mining. At the time, Beijing cited risks to financial stability. Now, stablecoins are being explored as a strategic tool to elevate the yuan’s global status, particularly amid the dominance of U.S. dollar-pegged stablecoins, which account for more than 99% of the global market supply (BIS).

Why Stablecoins Matter for China

Stablecoins are cryptocurrencies designed to maintain a fixed value, usually tied to fiat currencies like the dollar. Their underlying blockchain technology enables:

• Fast, low-cost, borderless payments.
• Around-the-clock money transfers.
• A new alternative to traditional cross-border settlement systems.

China sees stablecoins as an opportunity to expand yuan adoption in global trade, especially as Chinese exporters increasingly use dollar-backed stablecoins for transactions.

Global Context: U.S., South Korea, and Japan

• In the U.S., President Donald Trump has thrown his support behind stablecoins and is building a regulatory framework to legitimize them.
• South Korea plans to allow won-based stablecoins, while Japan is developing its own infrastructure.
• Hong Kong recently introduced a stablecoin ordinance (effective August 1), positioning itself as a pioneer in fiat-backed stablecoin regulation.

Hong Kong and Shanghai to Lead Implementation

Hong Kong and Shanghai are expected to spearhead the rollout of yuan stablecoins. Shanghai is already establishing an international operations hub for the digital yuan, while Hong Kong serves as a bridge for offshore yuan markets.

The initiative could also be a focal point at the Shanghai Cooperation Organisation (SCO) Summit in Tianjin (Aug. 31–Sep. 1), where Beijing may discuss expanding yuan and stablecoin usage in cross-border trade with partner nations.

Market Outlook

The global stablecoin market currently stands at around $247 billion (CoinGecko), but banks such as Standard Chartered project it could soar to $2 trillion by 2028. For Beijing, tapping into this fast-growing sector could accelerate its long-standing ambition of making the yuan a true international currency, rivaling the dollar and euro.