China is making a U-turn on its stance on cryptocurrencies as it looks to approve the issuance of Yuan stablecoins. The country considers this initiative as being key to rival the dollar’s dominance as the U.S. continues to warm up to dollar-backed stablecoins.
China Eyes Yuan Stablecoins For Global Adoption
According to a Reuters report, the Asian country is considering allowing the issuance of yuan-backed stablecoins for the first time as it looks to boost global adoption of its currency. This represents a major turnaround in the country’s stance on cryptocurrencies.
In line with this, the State Council, China’s cabinet, will review and possibly approve a roadmap later this month for the creation of these Yuan stablecoins in a bid to catch up with the U.S. push on stablecoins.
China had, in 2021, banned crypto trading and mining, a move that had set the country back, having earlier made headways in the crypto space. Now, the government is looking to play catch-up with the U.S., seeing as the Donald Trump administration has further advanced the crypto industry in the country with regulatory clarity.
This includes Trump’s signing of the GENIUS Act last month, which became the first major crypto legislation in the U.S. and coincidentally regulates stablecoins. Now, China will look to replicate this by providing guidance on Yuan stablecoins.
According to the report, China’s roadmap will target the usage of its currency in the global markets and outline the responsibilities of domestic regulators. It will also include guidelines on risk prevention.
Furthermore, during the State Council meeting, the country’s senior leaders are likely to deliver speeches that make a case for these Yuan stablecoins and also define the boundaries of their application and development in business.
This move could spark the use of stablecoins among companies and businesses in the country, similar to what is happening in the U.S. Since the passage of the GENIUS Act, traditional finance (TradFi) giants such as JPMorgan and Bank of America have begun exploring stablecoin use. Meanwhile, BlackRock described stablecoins as the ‘Mega Force’ in finance’s future.
The China-U.S. Rivalry
A SWIFT report shows that China still has a long way to go to rival the dollar’s dominance despite the Yuan stablecoins initiative. As of June, the USD market share as the global payment currency stood at 47.19% while the Yuan was at 2.88%.
However, a positive in allowing the issuance of Yuan stablecoins is that it could boost the demand for China’s debt. This will be similar to how dollar stablecoin issuers like Tether have become one of the major holders of U.S. treasuries since they are mandated to hold 1:1 reserves for these stablecoins in cash, short-term treasury bills, or other liquid assets.
Interestingly, U.S. Treasury Secretary Scott Bessent is betting on these stablecoins to boost demand for his country’s treasuries, as they look to issue more debt. As such, China could also enjoy a similar effect once Yuan stablecoins begin to roll out.
Boluwatife Adeyemi
Boluwatife Adeyemi is a well-experienced crypto news writer and editor who has covered topics that cut across several niches. His speed and alacrity in covering breaking updates are second to none. He has a knack for simplifying the most technical concepts and making them easy for crypto newbies to understand.
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Source: https://coingape.com/china-considers-yuan-backed-stablecoins-to-rival-dollar-dominance/
