China is considering allowing the launch of yuan-backed stablecoins for the first time in a major shift from its hardline stance on digital assets, sources familiar with the matter told Reuters.
The move is aimed at boosting the yuan’s global role and catching up with the U.S. push on dollar-pegged stablecoins.
The State Council, China’s cabinet, is expected to review a roadmap later this month outlining targets for yuan usage in global markets and assigning responsibilities to domestic regulators, the sources said. The plan will also include guidelines on risk prevention, reflecting Beijing’s caution about financial stability.
Shift from crypto ban to global strategy
If approved, the initiative would mark a major reversal from China’s 2021 ban on cryptocurrency trading and mining. At the time, Beijing cited risks to financial stability and capital flight.
China has long aspired for the yuan to achieve global currency status similar to the dollar or euro. But tight capital controls and large annual trade surpluses have restricted its internationalisation. Analysts say these same controls could complicate the rollout of stablecoins.
Stablecoins, typically pegged to fiat currencies, are increasingly used in global finance thanks to their low-cost, round-the-clock transfer capabilities. Currently, U.S. dollar-backed stablecoins dominate over 99% of the global market, according to the Bank for International Settlements.
Domestic and regional rollout plans
According to the sources, Beijing is preparing for senior leadership study sessions on yuan internationalisation and stablecoins, with speeches expected to set the tone and boundaries of their application.
Hong Kong and Shanghai are tipped to spearhead implementation. Hong Kong introduced its stablecoin ordinance on August 1, making it one of the first jurisdictions to regulate fiat-backed stablecoin issuers. Shanghai, meanwhile, is establishing an international operations hub for the digital yuan.
An offshore yuan stablecoin in Hong Kong is already being discussed, said PBOC adviser Huang Yiping in a recent interview.
Global context and geopolitical stakes
China’s push comes amid mounting geopolitical tensions with Washington and rising use of dollar-backed stablecoins by Chinese exporters. U.S. President Donald Trump has backed stablecoins and is building a regulatory framework to legitimise dollar-linked tokens.
China is expected to raise the issue of yuan-based stablecoins at the upcoming Shanghai Cooperation Organisation (SCO) Summit in Tianjin (Aug. 31–Sep. 1), exploring their use in cross-border trade and payments.
The global stablecoin market, valued at $247 billion according to CoinGecko, could surge to $2 trillion by 2028, estimates Standard Chartered Bank.
