China weighs allowing yuan-backed stablecoins to expand currency’s global use: report

The Block

Aug 20, 2025 20:54:16

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For the first time, China is mulling allowing the use of yuan-backed stablecoins to help expand the currency’s role in global trade and payments, according to Reuters.

China’s State Council is set to review, and could approve, a roadmap this month to expand the yuan’s global use that includes exploring yuan-backed stablecoins. The blueprint would set targets for offshore usage of the currency, assign responsibilities across domestic regulators, and include risk-management guidelines, the report said.

Any green light for a regulated stablecoin in China would mark a notable evolution in Beijing’s digital asset posture, which has long prioritized the central bank’s own digital yuan over privately issued tokens.

However, it seems policymakers see potential upside. Stablecoins enable near-instant, low-cost, 24/7 settlement and already serve as plumbing for global crypto markets, where dollar-pegged tokens dominate. Beijing is now weighing whether a yuan-denominated version could support cross-border trade and payments while remaining inside China’s compliance perimeter. It could also provide an onchain alternative to dollar-pegged tokens like Tether’s USDT and Circle’s USDC that dominate crypto capital flows today.

The Block's data dashboard shows that dollar-backed cryptos account for $265 billion of the $279 billion stablecoin market.

The consideration comes as the yuan’s share of global payments slipped to 2.88% in June, its lowest in two years, and far behind the dollar’s roughly 47% share, according to SWIFT data. President Donald Trump’s administration has also embraced a regulatory framework for stablecoins under the GENIUS ACT, adding pressure on China to clarify its own approach.

The discussion also tracks with moves in Hong Kong, where officials have been building a licensing regime for fiat-backed stablecoins to attract issuers and payments activity to the city. On the mainland, the People’s Bank of China has simultaneously scaled the e-CNY pilot and set up an e-CNY “center” to expand international reach, citing the influence of stablecoins in cross-border payments and signaling a desire to compete on efficiency and programmability.

Still, policymakers remain wary of investor hype and illicit-finance risks around privately issued tokens. Earlier this month, officials moved to tamp down stablecoin promotion on the mainland, and Shenzhen authorities flagged fiat-pegged token fraud concerns back in July.

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