China Weighs Yuan-Backed Stablecoins to Lift Currency’s Global Use

China’s cabinet, the State Council, is preparing to review a policy roadmap later this month that would authorise the issuance and use of yuan-backed stablecoins for the first time, according to people familiar with the matter. The plan forms part of a broader push to expand the currency’s international role and would mark a sharp departure from Beijing’s 2021 ban on cryptocurrency trading and mining.

Draft guidelines seen by the sources set targets for global yuan adoption, spell out risk-control measures and assign supervisory duties to the People’s Bank of China and other regulators. Hong Kong and Shanghai are expected to fast-track local implementation, leveraging the territory’s new stablecoin ordinance that took effect on 1 August. Beijing also intends to raise the issue of cross-border stablecoin use at the Shanghai Cooperation Organisation summit in Tianjin on 31 August–1 September.

Officials view stablecoins as a tool to chip away at U.S. dollar dominance in digital payments. Dollar-pegged tokens account for more than 99 % of the roughly US$247 billion global stablecoin market, Bank for International Settlements data show, and the greenback still settles 47.19 % of international payments. By contrast, the yuan’s share slipped to 2.88 % in June, its lowest in two years, according to SWIFT.

Analysts say capital controls will complicate any large-scale rollout, but an offshore yuan token could ease trade settlement in Asia if redemption and reserve rules are clear. Standard Chartered projects the stablecoin market could swell to US$2 trillion by 2028, underscoring the stakes for Beijing. Shares of insurance-technology firm ZA Online rose 6.6 % on local reports that regulators support yuan-pegged tokens, highlighting early market interest.

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