China Considers Yuan-Backed Stablecoins to Boost Global Usage

China is reportedly considering the introduction of yuan-backed stablecoins, a significant shift in its historically stringent approach to cryptocurrencies [1]. If approved, this initiative would represent the first time the country would officially permit such digital assets, potentially as part of a broader strategy to increase the international use of the renminbi. According to sources cited by Reuters, the plan is under review by the State Council and could be formalized by late August [2]. The move is seen as a response to the growing global adoption of U.S. dollar-backed stablecoins and aims to enhance the yuan’s role in global financial systems [3].

The proposed stablecoins would be digital assets directly pegged to the value of the yuan, offering a convenient and accessible alternative for cross-border transactions [4]. They could complement the existing digital yuan project, which has been piloted in various sectors since 2020. However, the initiative remains in an early stage, with officials carefully evaluating the regulatory and financial risks involved [5]. Unlike traditional cryptocurrencies, which China has banned for public use, these stablecoins would be backed by a fiat currency and potentially issued through regulated institutions, aligning them with broader monetary policies.

The development follows growing interest in stablecoins both within China and globally. In June 2025, a high-ranking official at the People’s Bank of China (PBOC) acknowledged the potential of stablecoins to transform global payment systems, adding momentum to calls for regulatory clarity [6]. While the PBOC has not yet issued a public statement confirming the reports, the increased discussion signals a shift in the official stance toward digital currencies [7]. The timing of the reports, coming in late August 2025, coincides with ongoing global discussions about the future of digital money and the role of central banks in shaping it.

Analysts suggest that the move could reflect a broader trend of central banks exploring the use of stablecoins to improve cross-border payments and financial inclusion [8]. Similar discussions are occurring in other major economies, though China’s approach is more ambitious in its potential to integrate stablecoins into a larger digital yuan ecosystem [9]. However, challenges remain, particularly in areas such as anti-money laundering (AML) compliance, cross-border transaction rules, and the need for international coordination to ensure regulatory alignment [10].

The introduction of yuan-backed stablecoins could have far-reaching implications for global trade and investment, particularly in regions where the yuan is increasingly used as a settlement currency [11]. Some multinational firms have already begun assessing the potential impact on their financial strategies, signaling early interest in the shift [12]. Yet, it is important to note that any implementation would require extensive planning and regulatory approval, and the ultimate form and function of these stablecoins remain uncertain [13].

Sources:

[1] China weighs yuan-backed stablecoins in major policy shift. (Cointelegraph) https://cointelegraph.com/news/china-considering-yuan-backed-stablecoins-global-currency-usage

[2] Exclusive: China considering yuan-backed stablecoins to boost global currency usage, sources say. (Reuters) https://www.reuters.com/business/energy/oil-firms-investors-await-next-steps-ukraine-peace-push-2025-08-20/

[3] Exclusive: China considering yuan-backed stablecoins to boost global currency usage, sources say. (Reuters) https://www.reuters.com/world/india/rupee-edges-lower-dollar-sales-by-foreign-banks-offset-most-greenback-demand-2025-08-20/

[6] Exclusive: China considering yuan-backed stablecoins to boost global currency usage, sources say. (Reuters) https://www.reuters.com/business/healthcare-pharmaceuticals/shares-novo-nordisk-rise-after-wegovy-gets-us-nod-liver-disease-treatment-2025-08-18/

[8] Companies plan stablecoins under new law, but experts say hurdles remain. (Reuters) https://www.reuters.com/company/morgan-stanley/

[9] Bank of Korea governor backs cautious stablecoin rollout. (Mitrade) https://www.mitrade.com/au/insights/news/live-news/article-3-1051577-20250819