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China is considering authorizing yuan-backed stablecoins in what would mark a dramatic reversal of its restrictive stance on digital assets, Reuters reported Wednesday, citing people familiar with the matter.
The proposal, still under review by China’s State Council, could be approved as early as late August. If adopted, it would represent Beijing’s first formal move to allow yuan-backed stablecoins as part of a broader strategy to internationalize its currency and counterbalance the rising influence of US dollar-pegged digital tokens.
“This would be a turning point in how China engages with the digital asset economy, not by embracing cryptocurrency, but by weaponizing stablecoin infrastructure to advance the yuan globally,” said Martin Chorzempa, Senior Fellow at the Peterson Institute for International Economics.
According to sources, the plan for yuan-backed stablecoins focuses on cross-border payments and trade, particularly with countries aligned through regional organizations such as the Shanghai Cooperation Organization (SCO). The proposal is expected to be discussed at the SCO Summit in Tianjin from August 31 to September 1.
Initial rollouts are likely to be concentrated in Hong Kong and Shanghai, two hubs already experimenting with digital finance and fintech regulation. A State Council roadmap reportedly includes not only adoption pathways but also safeguards to mitigate financial risks.
“The People’s Bank of China has consistently argued that reliance on a single dominant currency exposes global markets to shocks. Stablecoins could become a tool to reduce that dependency,” said Pan Gongsheng, Governor of the PBOC, in remarks earlier this summer.
China’s currency remains relatively marginal in the global payment system despite years of policy efforts. As of June, the yuan ranked sixth in global transactions, with a 2.9% share of value, according to data from SWIFT’s RMB Tracker.
The move to authorize yuan-backed stablecoins comes at a time when Beijing is seeking to expand the yuan’s international footprint while the US dollar maintains a commanding lead. The dollar accounted for 47.2% of global payments in June and dominates the stablecoin sector, where dollar-pegged tokens represent nearly 98% of the $288 billion market capitalization, according to CoinMarketCap.
“The challenge for China is scale. The yuan’s role in global finance remains modest, and any push for yuan-backed stablecoins will require strong cross-border adoption incentives,” said Eswar Prasad, Professor of Trade Policy at Cornell University.
China’s deliberations follow renewed momentum in Washington, where President Donald Trump has pledged to expand the role of dollar-pegged stablecoins in global commerce. Analysts note that Beijing’s interest in yuan-backed stablecoins may be a direct response to US digital currency diplomacy.
Neighboring jurisdictions have already moved ahead. Hong Kong introduced a dedicated regulatory framework for stablecoins on August 1, and domestic firms like Conflux have issued offshore yuan-linked tokens. These developments suggest China could leverage yuan-backed stablecoins not only as a monetary tool but also as a regulatory model distinct from Western counterparts.
In June, a PBOC official publicly acknowledged that stablecoins could transform global payment systems, signaling Beijing’s recognition that digital currencies may be too strategically important to ignore.
If the State Council approves the roadmap later this month, pilot projects could begin before the end of 2025, potentially making China one of the few major economies to directly back stablecoins with its national currency.
For policy makers worldwide, China’s pivot raises critical questions: how will global financial governance adapt if multiple reserve currencies compete not only in traditional markets but also in digital ecosystems?
By moving toward yuan-backed stablecoins, Beijing may be positioning itself to chip away at dollar dominance—one digital payment at a time.
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