Key Takeaways:
- China is considering legalizing yuan-backed stablecoins to internationalize its currency and counter U.S. dominance in the stablecoin space.
- The State Council will review a policy roadmap in August, with potential rollouts centered in Shanghai and Hong Kong.
- U.S. dollar-backed stablecoins still dominate the global market, comprising nearly 98% of total capitalization.
China is considering a major policy shift that could allow the launch of yuan-backed stablecoins, reversing its strict 2021 ban on cryptocurrency trading and mining.
According to Reuters, the State Council is expected to review a roadmap later in August outlining steps to promote global use of the yuan, mitigate risks, and counter U.S. dollar-backed stablecoins.
Exclusive: China considering yuan-backed stablecoins to boost global currency usage, sources say https://t.co/PwqbzufqJe https://t.co/PwqbzufqJe
— Reuters (@Reuters) August 20, 2025
If approved, the initiative would support China’s broader goal of internationalizing its currency and reducing reliance on the U.S. dollar.
A key use case would be cross-border trade and payments, with Hong Kong and Shanghai identified as primary hubs for rollout.
The issue will also be discussed at the Shanghai Cooperation Organization (SCO) Summit at the end of August.
Despite China’s ambitions, U.S. dollar stablecoins dominate the market, representing nearly 98% of the $288 billion capitalization and 47.2% of global payments by value.
In contrast, the yuan currently holds only a 2.9% share of international transactions.
Recent developments, such as Conflux’s offshore yuan stablecoin and Hong Kong’s new regulatory framework, indicate China is cautiously testing this path.
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