Nikolas Sargeant
China is reportedly considering authorizing yuan-backed stablecoins for the first time in a dramatic policy reversal aimed at expanding its currency's global influence. Sources familiar with the matter indicate that China's State Council will review a comprehensive roadmap this month that could allow the controlled rollout of digital tokens pegged to the Chinese yuan, marking a significant departure from the country's strict anti-cryptocurrency stance established in 2021.
The potential move comes as Beijing seeks to boost international adoption of the yuan amid concerns about its declining global market share. According to SWIFT payment platform data, the yuan's share as a global payment currency fell to 2.88% in June 2025, its lowest level in two years, while the U.S. dollar maintained dominance with a 47.19% market share. Chinese officials view yuan-backed stablecoins as a strategic tool to enhance cross-border payments and reduce reliance on dollar-dominated financial systems.
The State Council is expected to establish adoption targets and regulatory frameworks for these digital assets, with leaders planning a study session on yuan internationalization and digital assets later this month. This initiative would complement China's existing central bank digital currency (e-CNY), which is designed for domestic retail use, while stablecoins could target international trade and finance markets. The global stablecoin market, currently valued at approximately $247 billion according to CoinGecko, could potentially grow to $2 trillion by 2028, as estimated by Standard Chartered Bank.
The stablecoin initiative builds upon China's existing digital yuan infrastructure, which has already achieved significant momentum at the municipal level. Guangzhou's Municipal Financial Work Committee recently unveiled an ambitious 2025-2026 roadmap to accelerate digital yuan adoption throughout the city, designating Yuexiu and Nansha Districts as pioneering zones for central bank digital currency implementation. The program includes plans for partial salary payments to public officials in digital yuan, comprehensive transportation integration across metro systems and buses, and specialized monitoring platforms for merchant transactions. Guangzhou's initiative also extends to international commerce through specific measures for port logistics and supply chain operations, demonstrating how digital yuan infrastructure could support broader global currency ambitions.
However, the implementation faces significant challenges due to China's strict capital controls, which manage currency flows in and out of the country. The success of yuan-backed stablecoins would require careful navigation of these regulatory constraints while ensuring compliance with international financial regulations. If approved, this policy shift could represent a major step in China's broader strategy to challenge the dollar's dominance in global digital finance and establish the yuan as a more prominent international currency.
