AsianFin – China is reportedly considering allowing yuan-backed stablecoins for the first time, a potential move aimed at expanding the international adoption of its currency, Reuters reported on Thursday, citing sources familiar with the matter. The plan would mark a significant shift in Beijing’s stance toward digital assets, which it has historically regulated tightly.
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Sources said the State Council, China’s cabinet, is expected to review and potentially approve a roadmap later this month to promote broader global usage of the yuan, including keeping pace with the U.S.’s growing push into stablecoins. The roadmap is anticipated to include targets for international yuan usage, clarify domestic regulators’ responsibilities, and outline measures for risk prevention.
Senior Chinese leadership is also expected to hold a study session on yuan internationalisation and stablecoins by the end of this month, according to one source. The session is likely to feature remarks from senior leaders defining the parameters of stablecoin applications in business and setting the policy tone for development.
If approved, the plan would represent a marked reversal for China, which banned cryptocurrency trading and mining in 2021 over concerns about financial stability. Stablecoins, a type of cryptocurrency typically pegged to a fiat currency such as the U.S. dollar, have become increasingly popular globally as tools for seamless, round-the-clock fund transfers and cross-border payments.
China has long sought to elevate the yuan to a global reserve currency status akin to the U.S. dollar or euro, reflecting its position as the world’s second-largest economy. Yet tight capital controls and large trade surpluses have limited the yuan’s international use. Analysts say these restrictions could also present challenges for the development of yuan-backed stablecoins.
Currently, the yuan’s share of global payments has fallen to 2.88% as of June, its lowest in two years, according to SWIFT. By contrast, the U.S. dollar commands a 47.19% market share. Stablecoins pegged to the dollar dominate the market, representing more than 99% of the global stablecoin supply, according to the Bank for International Settlements.
In the U.S., regulatory frameworks are being established to support the adoption of stablecoins. President Donald Trump, shortly after taking office, backed initiatives promoting dollar-pegged stablecoins, underscoring their potential role in modern financial systems. The technology behind stablecoins allows instant, low-cost, borderless transfers, positioning them as a potential disruptor to traditional payment networks.
Sources say Beijing sees stablecoins as a promising tool to advance yuan internationalisation amid the increasing influence of dollar-backed cryptocurrencies in global trade. Officials are reportedly exploring offshore yuan stablecoins in financial hubs such as Hong Kong, where a new stablecoin ordinance came into effect on August 1, making it one of the first markets worldwide to regulate fiat-backed stablecoin issuers. Shanghai is also moving ahead, establishing an international operation center for the digital yuan.
The roadmap is expected to assign implementation duties to Chinese regulators, including the People’s Bank of China (PBOC), and to fast-track pilot programs in Hong Kong and Shanghai. China may also discuss expanding the use of yuan-backed stablecoins for cross-border trade with partners at the Shanghai Cooperation Organisation Summit, scheduled for August 31–September 1 in Tianjin.
Other Asian countries are pursuing similar initiatives. South Korea has pledged to allow won-backed stablecoins and build the necessary infrastructure, while Japan is also exploring digital currency frameworks. Globally, the stablecoin market remains relatively small, valued at around $247 billion according to crypto data provider CoinGecko, but Standard Chartered Bank projects it could reach $2 trillion by 2028.
China’s renewed focus comes amid heightened geopolitical tensions with Washington and growing reliance on dollar-backed stablecoins by Chinese exporters. In recent months, local regulators in Shanghai reportedly held strategic sessions to evaluate responses to the rising stablecoin trend and the broader digital currency landscape.
Experts say that the adoption of yuan-backed stablecoins could help reduce reliance on the U.S. dollar for Chinese exporters and create a framework for secure, regulated cross-border payments. “Financial innovation, particularly stablecoins, is increasingly being viewed as a strategic tool to promote the yuan globally,” said one source familiar with the discussions.
The coming weeks are expected to provide more clarity, as Chinese regulators finalize details of the roadmap and begin laying out pilot programs. If successfully implemented, yuan-backed stablecoins could provide a new channel for China to expand its currency’s global footprint, modernize its payment systems, and create new mechanisms for international trade settlement.
While challenges remain, including strict capital controls and market adoption hurdles, Beijing’s cautious embrace of stablecoins signals a broader willingness to explore innovative financial technologies in pursuit of global influence. Analysts say this could reshape cross-border payment flows and position the yuan as a more significant player in international finance.
