China may approve yuan-backed stablecoins in a major policy shift to boost yuan internationalization and counter US stablecoin dominance.
Author: Akshat Thakur
August 20, 2025 — China is reportedly considering the introduction of yuan-backed stablecoins in a potential policy reversal, according to Reuters. The move would represent a major shift from its previous stance after banning crypto trading and mining in 2021.
China’s cabinet, the State Council, is preparing to review a roadmap later in August that includes yuan-backed stablecoins as part of its strategy to expand global yuan adoption. This development would align with efforts to internationalize the currency and reduce reliance on the US dollar.
The plan reportedly addresses both opportunities and risks, with guidelines for safe implementation. If approved, it could mark the first time China formally allows yuan-backed stablecoins, potentially reshaping its approach to digital finance.
One of the main use cases being considered for yuan-backed stablecoins is cross-border trade and settlement. The policy could be discussed further at the upcoming Shanghai Cooperation Organization (SCO) Summit, scheduled for Aug. 31 to Sept. 1 in Tianjin.
Hong Kong and Shanghai are seen as key hubs for the early rollout. Both cities have already played important roles in China’s financial modernization and could serve as pilot regions for stablecoin adoption.
As of June 2025, the yuan accounted for 2.9% of global payments, ranking sixth according to Swift’s RMB Tracker. By launching yuan-backed stablecoins, China hopes to boost its currency’s international influence and better compete with global reserve currencies like the US dollar and euro.
Meanwhile, US dollar-backed tokens dominate the stablecoin market, making up 98% of its $288 billion capitalization. The Chinese government views yuan-backed stablecoins as a way to counterbalance this dominance.
The potential approval of yuan-backed stablecoins represents a significant turning point in China’s financial policy. While the US dollar still dominates both payments and stablecoin markets, China’s entry into the sector could accelerate the yuan’s global use and challenge existing dynamics in international trade.
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