Reuters: China May Approve Yuan-Backed Stablecoins to Boost Global Use

TLDR

• China is considering approving yuan-backed stablecoins for the first time.
• The State Council will review a roadmap later in August for the proposal.
• The move would mark a shift from China’s 2021 ban on crypto trading and mining.
• The plan seeks to expand the global use of the yuan and reduce reliance on the dollar.
• Hong Kong and Shanghai have been identified as hubs for stablecoin rollout.

China is reportedly considering authorizing yuan-backed stablecoins in a move that could reshape global currency markets. Reuters reported that the State Council may approve a roadmap in late August to expand international use of the yuan. The proposal would represent a major reversal from China’s earlier ban on crypto trading and mining in 2021.

China Weighs Stablecoin Strategy amid U.S. Push

According to sources, China’s State Council will review the plan before the Shanghai Cooperation Organization Summit in Tianjin. The roadmap includes strategies to counter recent U.S. progress on stablecoins while establishing guidelines for risk prevention. Reuters sources noted that approval would mark a “significant departure” from China’s earlier restrictive stance.

Furthermore, the initiative highlights China’s growing focus on promoting the yuan as a global currency. The move would also align with the country’s broader economic goals. However, the final decision is expected only after senior officials evaluate potential risks and benefits.

Officials have underlined the importance of timing, given U.S. efforts to advance dollar-backed tokens. By contrast, China’s strategy appears centered on stability and gradual adoption. This measured approach is intended to strengthen international confidence in the yuan.

Global Ambitions for the Yuan

China aims to position the yuan as a stronger competitor to the U.S. dollar and euro. Data from Swift showed that the yuan held a 2.9% share of global payments by value in June. In contrast, the U.S. dollar accounted for 47.2% during the same period.

The stablecoin plan directly supports this ambition, particularly in cross-border trade and payments. Analysts suggest that yuan-backed tokens could reduce dependence on other reserve currencies. Moreover, such instruments may encourage wider adoption of the yuan among emerging economies.

China’s People’s Bank Governor Pan Gongsheng stated in June that the goal was to “weaken excessive reliance on a single sovereign currency.” He added that Shanghai would host a new center for digital yuan internationalization. This development further demonstrates the government’s determination to globalize its currency.

Regional Hubs and Market Response

Sources identified Hong Kong and Shanghai as priority hubs for stablecoin rollout. Both regions already play crucial roles in financial innovation. Hong Kong recently introduced a dedicated regulatory framework for stablecoins on August 1.

In July, the blockchain platform Conflux launched an offshore yuan-backed stablecoin. That move signaled growing private-sector readiness for yuan-based tokens. Officials view these early efforts as complementary to state-led initiatives.

Meanwhile, U.S. dollar-backed stablecoins still dominate with 98% of the $288 billion market capitalization. Yet, China’s potential entry could diversify options for global users. Market participants now await the upcoming SCO Summit for further clarity.

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