Recent developments indicate that Beijing is exploring options to allow the wider use of yuan-backed stablecoins beyond its borders, signifying a potential pivot in its approach to digital currency.
This potential shift contrasts sharply with the stringent measures enacted in 2021 against cryptocurrency trading and mining. The new strategy would establish regulatory parameters, delineate responsibilities, and clarify which authorities will be involved.
The State Council is anticipated to examine a comprehensive roadmap later this month that outlines these regulatory frameworks.
Testing Grounds for Yuan-Backed Stablecoins
A recent report from Reuters has revealed that Hong Kong and Shanghai will likely be the initial testing grounds for these new regulations.
As of August 1, Hong Kong has implemented its stablecoin legislation, while Shanghai is establishing a center dedicated to the digital yuan’s international operations.
It is speculated that senior officials may convene a session by the end of the month to outline the extent and limitations of stablecoin usage.
According to advisors from the People’s Bank of China, the introduction of an offshore yuan stablecoin in Hong Kong is being considered, indicating a positive outlook on the initiative.
China Weighs Yuan-Backed Stablecoins as Part of Global Currency Strategy
Sources reveal that China is contemplating the launch of yuan-backed stablecoins to enhance the international standing of its currency. The… pic.twitter.com/Brwn7lGN6E— CN Wire (@Sino_Market) August 20, 2025
Global Market Dynamics and Implications
The Bank for International Settlements reports that fiat-backed stablecoins pegged to the US dollar comprise nearly the entirety of the global market for such currencies.
Current estimates suggest that this market is valued at approximately $245 billion, with projections from Standard Chartered estimating it could soar to $2 trillion by 2028.
Notably, the yuan’s representation in global payments dropped to nearly 3% as of June, while the US dollar maintains a dominant 47% share, according to SWIFT data.
In the US, former President Donald Trump has vocalized support for stablecoins and is advocating for a regulatory framework to support their integration.
Timeline
Upcoming weeks may see crucial details relating to the stablecoin initiative being disclosed. Beijing might engage in discussions with its trading partners regarding this matter during the Shanghai Cooperation Organization Summit scheduled for August 31–September 1 in Tianjin.
Practical Limits and Economic Considerations
However, analysts caution that China’s stringent capital controls and significant trade surpluses could pose challenges for the widespread adoption of yuan-backed stablecoins in international markets.
Concerns have been raised that these controls might restrict the free movement of yuan-linked tokens across borders.
The forthcoming roadmap is expected to detail preventative measures against potential risks and assign implementation roles to local regulatory bodies, including the PBOC.
Image credit to Henderson Land; Data source: TradingView
