China Weighs Yuan-Backed Stablecoins to Expand Global Currency Reach #
China’s State Council is considering a policy roadmap to launch yuan-backed stablecoins, aiming to strengthen the yuan’s role in global finance and provide an alternative to the U.S. dollar in cross-border trade. The plan, now under review by senior policymakers, would establish regulatory frameworks and risk controls, with pilot programs in Hong Kong and Shanghai expected to come first. Sources say the initiative is set to be discussed at the upcoming Shanghai Cooperation Organization (SCO) Summit in Tianjin
If adopted, the move would mark a significant shift from Beijing’s 2021 blanket ban on cryptocurrency trading and mining, signaling that while speculative crypto remains restricted, state-controlled digital assets could be harnessed for strategic and geopolitical ends. Stablecoins pegged to the yuan would complement the rollout of the e-CNY (digital yuan), but with a different use case: enhancing liquidity in international settlements and trade invoicing, where China has long sought to reduce dependency on the U.S. dollar
Proponents argue yuan-backed stablecoins could lower costs, increase transparency, and accelerate payments for Chinese exporters and trading partners in Asia, Africa, and the Middle East. However, analysts warn that introducing a state-linked stablecoin at scale may draw scrutiny from global regulators, heighten financial tensions with Washington, and test capital control policies that have historically limited yuan convertibility