China may approve yuan-backed stablecoins amid fears of dollar-powered tokens

China may soon permit yuan-backed stablecoins for the first time in a bid to accelerate the international adoption of its currency and compete with the US, Reuters reported Wednesday, citing sources with knowledge of the matter.

The State Council is set to review and may approve a roadmap later this month that would set adoption targets, assign regulatory responsibilities, and outline risk controls.

The plan marks a major reversal from Beijing’s 2021 ban on crypto trading and mining, reflecting growing concern over the dominance of dollar-backed tokens, which account for more than 99% of global stablecoin supply. Senior leaders are expected to hold a study session focused on yuan internationalization and the role of stablecoins, with official remarks likely to define the boundaries of their use in business.

China’s push comes as the yuan’s share in global payments fell to 2.88% in June, its lowest in two years, compared with nearly 47% for the U.S. dollar, according to SWIFT. Stablecoins, pegged to fiat currencies and powered by blockchain, are seen in Beijing as a tool to promote cross-border trade settlement and reduce reliance on the dollar.

Implementation duties will fall on regulators, including the People’s Bank of China, with Hong Kong and Shanghai identified as priority hubs. Hong Kong’s new stablecoin law, effective on August 1, already made the territory one of the first jurisdictions globally to regulate fiat-backed stablecoin issuers.

China also plans to raise the issue at the Shanghai Cooperation Organization summit in Tianjin later this month, potentially expanding yuan usage and stablecoin settlement in cross-border trade. The move follows US President Donald Trump’s early backing of dollar stablecoins and comes amid rising geopolitical tensions over financial infrastructure.

This is a developing story. Please come back for further updates.