China considers legalising yuan-backed stablecoins: reports
China is considering legalising stablecoins backed by the yuan after years of strict laws on cryptocurrencies, according to sources. If approved, this would reverse its 2021 ban on crypto trading and mining, which was implemented to maintain financial stability. The shift is driven by global competition, as the United States advances in stablecoin adoption and China considers more active participation in this area.
The roadmap under review
China has aimed to position the yuan as a global reserve currency alongside the US dollar and the euro. However, capital controls and trade surpluses have limited progress. Stablecoins may address these challenges and support wider international use.
The State Council of China is expected to review a roadmap by the end of the month, said the sources. The plan outlines targets for the use of the yuan in global markets, assigns roles to domestic regulators, and includes measures to prevent risks. Senior officials are holding a study session on stablecoins as part of the process.
In the United States, President Donald Trump has expressed support for stablecoins and is developing a regulatory framework. This has positioned dollar-backed stablecoins as the leading option in global crypto finance. China may fall behind in a market expected to reach $4 trillion by 2030 if it does not respond quickly.
Current position of the yuan stablecoins
Stablecoins are cryptocurrencies linked to real-world assets, typically fiat currencies, to maintain a stable value. They utilise blockchain technology to facilitate continuous, low-cost cross-border transactions, which are commonly used in international trade settlements.
The yuan makes up 2.88 percent of global payments, while the dollar accounts for 47.19 percent, according to SWIFT. China faces challenges due to capital control policies that restrict cross-border money flow.
Wang Yongli, a former Vice President of the Bank of China, said that in the digital age, the dollar may control cross-border payments if there are no competitive yuan stablecoins. China may take two approaches: allow private companies like JD.com and Ant Group to issue yuan-backed stablecoins for wider use, while maintaining the promotion of the digital yuan for official use.
Hong Kong’s role in stablecoin development
On 21 May 2025, Hong Kong enacted the Stablecoins Bill, which came into effect on 1 August. The law requires stablecoin companies to hold a licence from the Hong Kong Monetary Authority. This makes Hong Kong a location for stablecoin development within China. The US dollar currently serves as the backing for 99 percent of stablecoins. The market is projected to grow significantly by 2030, and without yuan-backed alternatives, the dollar is likely to remain the dominant currency.
Potential economic benefits for China
Yuan stablecoins could lower the cost and speed up international trade settlements, raise the yuan’s share in global reserves, and reduce dependence on US dollar-based payment systems such as SWIFT.
Yuan-backed stablecoins have the potential to lessen the dominance of the US dollar in digital banking, encourage currency reserve diversification, and change the dynamics of cross-border payments if they are implemented. The acceptance of stablecoins backed by the yuan is part of a broader plan to strengthen the yuan’s position in international and digital finance. This may influence the structure of the global monetary system by 2030.
