China is preparing to lift its long-standing crypto ban by legalizing yuan-pegged stablecoins before the end of August, according to Reuters. This would be the first time the country allows any form of stablecoin tied to its national currency.
The decision is expected to be reviewed by the State Council, the highest administrative body in China, which will also decide how this stablecoin rollout fits into its larger strategy to push the yuan into wider global use.
The proposal includes a detailed plan assigning roles to domestic regulators and setting benchmarks for the international use of the yuan. It also contains instructions for managing potential risks, including capital flow monitoring and cross-border compliance.
The government is set to hold a high-level meeting this month focused on expanding the yuan’s global presence, and the agenda will include stablecoins. Senior officials are expected to speak publicly for the first time on how these digital assets can be used in business without undermining state control.
Beijing sets stablecoin rules amid growing U.S. dollar pressure
If approved, the legalization of yuan-backed stablecoins would break a 12-year ban on crypto operations in China, including the 2021 crackdown that outlawed mining and trading.
The change in direction comes as the government faces mounting pressure from the rise of U.S. dollar-backed stablecoins in international payments, especially by Chinese exporters. The country wants to push the yuan into more cross-border transactions without opening its capital account.
Despite being the world’s second-biggest economy, China has struggled to turn its currency into a real global rival to the dollar. In June, the yuan made up just 2.88% of global payments, while the dollar held 47.19%, based on data from SWIFT.
Strict capital controls and persistent trade surpluses have made it difficult to promote the yuan abroad, and those same controls may also limit the reach of yuan-backed stablecoins.
Still, Beijing sees stablecoins as a tool to fight back. But with the United States building a stablecoin framework under President Donald Trump, Jinping appears determined not to fall behind.
Regulators in Shanghai and Hong Kong have already begun laying the groundwork. Huang Yiping, an advisor to the People’s Bank of China (PBOC), told local media that issuing an offshore yuan stablecoin in Hong Kong is “a possibility.”
The territory’s stablecoin ordinance went into effect on August 1, making it one of the few places in the world with clear rules for fiat-backed crypto issuers.
Meanwhile, Shanghai is setting up an international hub for the digital yuan and held a recent meeting to explore how local governments should handle stablecoins and other crypto tools.
Hong Kong and Shanghai chosen for rollout as SCO summit looms
Hong Kong and Shanghai will lead the implementation of the new rules if the plan moves forward. These cities are seen as testing grounds for how China could use stablecoins in trade without losing control of capital movement.
The roadmap being reviewed assigns the People’s Bank of China as the main agency for overseeing the rollout, including rule enforcement and technical support.
While neither the State Council Information Office nor the PBOC responded to requests for comment, the stablecoin discussion is expected to take center stage at the upcoming Shanghai Cooperation Organisation (SCO) Summit, which will be held in Tianjin from August 31 to September 1.
China will likely use the summit to open talks with other countries about accepting yuan-based payments, including through stablecoins.
Right now, U.S. dollar-pegged stablecoins account for more than 99% of the global stablecoin supply, based on figures from the Bank for International Settlements. That domination has raised alarm in Beijing, especially as stablecoins gain more use in daily international business.
Other governments across the region are also moving fast. South Korea is working on infrastructure for won-based stablecoins, and Japan is exploring similar plans.
The global market for stablecoins, currently valued at $247 billion by CoinGecko, could explode in size. Standard Chartered Bank projects that number to reach $2 trillion by 2028.
