China is poised to approve a plan to allow yuan-backed stablecoins, a significant policy shift aimed at boosting the global use of its currency.
The move, which reverses China’s 2021 ban on cryptocurrency trading and mining, reflects Beijing’s ambition to elevate the yuan’s international presence amid U.S. dollar dominance.
The State Council, China’s cabinet, is expected to review and potentially approve a roadmap for yuan internationalization later this month, Reuters reported. The plan includes targets for increasing the yuan’s use in global markets, guidelines for risk prevention, and roles for domestic regulators. A study session with senior Chinese leaders is also anticipated by the end of the month to discuss stablecoins and set boundaries for their business applications.
Stablecoins, cryptocurrencies designed to maintain a stable value and typically pegged to fiat currencies like the U.S. dollar, are seen as a tool to counter the dollar’s 47.19% share of global payments, as reported by SWIFT in June, when the yuan’s share dropped to 2.88%, its lowest in two years. The sources noted that financial innovation through stablecoins could leverage blockchain technology for low-cost, instant, and borderless fund transfers, potentially disrupting traditional payment systems.
The plan would fast-track stablecoin implementation in Hong Kong and Shanghai, though China’s strict capital controls, which limit cross-border financial flows, pose challenges, market participants said. The sources also indicated that China will address yuan internationalization at an upcoming summit in Tianjin.
This push follows President Donald Trump’s January endorsement of dollar-pegged stablecoins and efforts to establish a regulatory framework for them, highlighting their growing role in global finance.