- China’s State Council is set to review a roadmap later this month that could approve yuan-backed stablecoins to expand the currency’s global reach.
- The move marks a potential reversal from China’s 2021 crypto ban, driven by efforts to counter U.S. dollar-backed stablecoins dominating 99% of the market.
- Hong Kong and Shanghai are identified as key hubs for rollout, aligning with recent regulatory frameworks in Hong Kong.
- The initiative includes risk prevention guidelines and targets for offshore yuan usage, amid declining global payment share at 2.88% in June.
China is considering authorizing yuan-backed stablecoins for the first time, a significant shift from its previous restrictive stance on digital assets. This development comes as Beijing seeks to enhance the international adoption of the renminbi (RMB) and challenge the dominance of U.S. dollar-pegged tokens like USDT and USDC.
According to sources familiar with the matter, China’s State Council is poised to review and potentially approve a roadmap later in August. The plan outlines targets for global yuan usage, assigns responsibilities to domestic regulators, and includes measures for risk management. Senior leaders may also hold a study session on yuan internationalization and stablecoins, setting boundaries for their business applications.
U.S. dollar-backed stablecoins control over 99% of the $288 billion market.
This policy reversal follows China’s 2021 ban on crypto trading and mining, motivated by financial stability concerns. Now, stablecoins are viewed as a tool to promote cross-border trade and payments, reducing reliance on the dollar. People’s Bank of China Governor Pan Gongsheng stated in June that the goal is to “weaken excessive reliance on a single sovereign currency,” while establishing a digital yuan center in Shanghai.
The yuan’s share in global payments dropped to 2.88% in June, its lowest in two years, compared to the dollar’s 47%.
According to this report by The Block, the yuan’s share in global payments dropped to 2.88% in June, its lowest in two years, compared to the dollar’s 47%. U.S. dollar-backed stablecoins control over 99% of the $288 billion market, prompting Beijing to act amid U.S. regulatory support under the GENIUS Act.
Hong Kong and Shanghai will prioritize implementation, building on Hong Kong’s new stablecoin framework effective August 1. China may discuss yuan and stablecoin expansion at the Shanghai Cooperation Organization Summit in Tianjin from August 31 to September 1.
Community sentiment on X reflects optimism. One post noted, “CHINA IS CONSIDERING ALLOWING YUAN-BACKED STABLECOINS TO BOOST YUAN INTERNATIONALIZATION. CHINA IS STARTING TO FOMO!” However, challenges remain, including capital controls and geopolitical tensions.
While this could diversify the stablecoin market beyond Bitcoin volatility, experts warn of risks like fraud and limited adoption due to regulatory hurdles.
Disclaimer: This article is for informational purposes only and does not constitute legal, tax, investment, or financial advice. Readers should conduct their own research before making investment decisions. We use AI to help us research and enhance the text or visual aids, which are then edited by our team.
