Global Currency Ambitions Drive China’s Stablecoin Plans
China is considering allowing yuan-backed stablecoins for the first time in a major reversal of its stance on digital assets, according to a report from Reuters, a move could mark a significant step toward Beijing’s long-standing ambition of elevating the yuan into a true global currency.
A Strategic Policy Shift
The State Council, China’s cabinet, is expected to review and potentially approve a roadmap later this month that would outline steps to expand the yuan’s role in international markets. According to the sources cited in the report, the roadmap would set specific adoption targets, assign responsibilities to regulators, and include measures for risk prevention.
Senior Chinese leaders are also scheduled to meet for a study session on yuan internationalisation and stablecoins, during which they are expected to issue directives that could shape the development and use of stablecoins in business and trade.
From Crypto Ban to Stablecoin Embrace
The potential policy marks a stark departure from China’s 2021 ban on cryptocurrency trading and mining, which had been imposed over concerns about financial stability. Stablecoins—digital tokens pegged to fiat currencies—have since become critical tools in global finance, especially as the U.S. dollar dominates the market. Currently, dollar-backed stablecoins account for more than 99% of global supply, according to the Bank for International Settlements.
China’s move, if implemented, could offer a direct challenge to U.S. dominance by positioning the yuan as a viable competitor in the global currency landscape. Analysts note, however, that Beijing’s strict capital controls remain a major hurdle to wider adoption of yuan-backed stablecoins.
Global Push for Stablecoins
The Reuters report highlights that other Asian economies are also moving in this direction. South Korea has pledged to allow won-backed stablecoins, and Japan is developing similar infrastructure. Meanwhile, Hong Kong, under Chinese jurisdiction, has already introduced a stablecoin regulatory framework that took effect on Aug. 1.
Sources told Reuters that Hong Kong and Shanghai will serve as key hubs for the rollout of yuan stablecoins, with discussions on cross-border use expected at the upcoming Shanghai Cooperation Organisation (SCO) Summit in Tianjin later this month.
Geopolitical Context of the Global Currency Race
The timing of China’s plan coincides with growing geopolitical tensions with Washington. In the U.S., President Donald Trump has thrown his support behind stablecoins and is working toward a regulatory framework for dollar-pegged tokens.
That U.S. momentum is seen as part of the reason Beijing is accelerating its own stablecoin strategy to ensure the yuan remains competitive as a global currency in the digital age.
Though the stablecoin market is relatively small at about $287 billion, Standard Chartered forecasts it could reach $2 trillion by 2028.
Stablecoin market overview (Source: CoinMarketCap)
If Beijing moves forward, yuan-backed stablecoins could capture a meaningful share of this growth while advancing China’s efforts to internationalize its currency and join the global currency race.
