China Officially in Talks to Launch Yuan-Backed Stablecoin

China is reportedly weighing whether to authorize yuan-backed stablecoins. It would be a major reversal of its restrictive crypto stance. According to Reuters, sources familiar with the matter say the State Council will review a roadmap later this month that could open the door to stablecoin issuance tied directly to the Chinese yuan.

China: from crypto ban to strategic pivot

The development comes nearly four years after China banned crypto trading and mining in September 2021. While Beijing has since promoted its CBDC, the digital yuan, stablecoins were largely seen as off-limits. A potential policy shift would signal that authorities now view stablecoins as a tool for expanding the yuan’s role in global finance.

The move also comes amid mounting competition with the United States, where dollar-backed stablecoins dominate nearly 98% of the $288 billion global stablecoin market. President Trump has pledged to support U.S. stablecoins as part of a broader push to reinforce the dollar’s global reach, a development that has not gone unnoticed in Beijing.

Cross-border trade at the core

According to sources, China’s roadmap emphasizes cross-border use cases. A yuan-pegged stablecoin could facilitate trade and payments with partner countries, especially within frameworks like the Shanghai Cooperation Organization (SCO). The topic is expected to be on the agenda at the SCO Summit in Tianjin on August 31-September 1.

Hong Kong and Shanghai have been identified as priority hubs for any rollout. Notably, Hong Kong already launched a regulatory framework for stablecoins on August 1, setting the stage for closer alignment with mainland policy.

Challenging the dollar’s grip

The yuan currently ranks sixth in global payment usage with a 2.9% share, according to Swift. By contrast, the U.S. dollar represents 47.2% of global payments. While the gap is significant, Chinese officials argue that stablecoins could help reduce excessive reliance on a single sovereign currency, according to Bank of China Governor Pan Gongsheng.

With Beijing’s new interest, the global stablecoin market could be entering a new phase of geopolitical competition. Dollar-pegged tokens may dominate today, but yuan-backed stablecoins could emerge as a counterweight, especially in Asia and among trading partners eager to reduce their dependence on the greenback.