China Reviews Stablecoin Plan That Could Put Yuan on Global Crypto Stage

TLDR:

• China may allow stablecoins backed by the yuan for the first time, with Hong Kong and Shanghai preparing pilot rollouts.
• The State Council will review a roadmap this month that sets adoption targets and regulatory duties for stablecoins.
• Reuters reported leaders will hold a study session on yuan internationalisation and digital assets later this month.
• Stablecoins pegged to the yuan could boost cross-border payments but face hurdles from China’s strict capital controls.

China is preparing for a potential turn in its digital currency policy. For the first time, yuan-backed stablecoins are on the table. 

Reuters reported that officials are reviewing a plan that could allow the controlled rollout of such tokens. Sources familiar with the matter said the roadmap will be reviewed this month by the State Council. If approved, it would reverse more than a decade of restrictions on crypto in the country.

Crypto Plan Under State Council Review

The reported plan includes adoption targets for yuan use in global markets. It also sets out which regulators will handle oversight. 

According to Reuters, the People’s Bank of China will play a leading role in shaping the rollout. Officials are expected to issue guidelines for risk management to prevent financial instability.

China’s senior leadership is preparing a study session at the end of this month. Stablecoins and yuan internationalisation will be at the center of discussion, Reuters reported. Leaders are expected to deliver guidance that will define how these assets can be used in business. That direction will set boundaries for both application and development.

Wu Blockchain, citing the Reuters report, said Hong Kong and Shanghai could lead the rollout. Early use cases may include cross-border trade and payments. These applications have long been identified as areas where blockchain-based currencies can reduce costs and speed up transfers.

The potential approval would follow a long history of restrictions. China banned crypto trading and mining in 2021 over concerns about its financial system. A controlled stablecoin model would represent a reversal of that approach.

Yuan Internationalisation and Crypto Markets

For years, China has pushed for broader adoption of the yuan. Despite its position as the world’s second-largest economy, the currency holds only a small global share. 

Data from SWIFT shows yuan payments dropped to 2.88% in June, the lowest in two years. In contrast, the U.S. dollar holds nearly half of global transactions.

Stablecoins could provide Beijing with a way to strengthen the yuan’s global role. They offer faster, cheaper transfers that work across borders around the clock. Reuters sources said Beijing views these tools as an opportunity to counter the growing presence of U.S. dollar-backed stablecoins.

However, challenges remain. China maintains strict capital controls that limit the movement of money across its borders. These rules may restrict how much stablecoins can expand, even with state support. Market participants have raised questions about whether the model can succeed under these conditions.

The timing also reflects global momentum around stablecoins. In the U.S., President Donald Trump recently voiced support for dollar-pegged tokens. Washington is moving forward with a regulatory framework designed to strengthen their role in finance. Beijing’s plan appears to respond directly to that push.

Sources told Reuters that final details could be released in the coming weeks. For now, the proposal remains under review, with the State Council expected to decide later this month.

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