On August 20, 2025, sources familiar with high-level deliberations revealed that China’s State Council is considering a pioneering move to permit yuan-backed stablecoins, signaling a strategic effort to internationalize the renminbi and challenge the dominance of US dollar–pegged digital currencies in global finance. The proposed plan, expected to be formally reviewed and possibly approved later this month, outlines targets for the yuan’s broader usage in international settlements and remittances, alongside a comprehensive regulatory framework to govern stablecoin issuance, operational oversight, and reserve management.
The roadmap details roles and responsibilities for domestic regulators, including the People’s Bank of China (PBOC), which would oversee the licensing of stablecoin issuers and enforce stringent guidelines on reserve backing, auditing standards, and transparency requirements. Pilot schemes are slated to launch in key offshore hubs—Hong Kong and Shanghai—where the existing stablecoin ordinance and digital yuan testing infrastructure can be leveraged to implement controlled experiments. Officials anticipate convening a senior leadership study session by month’s end to deliver authoritative guidance on permissible use cases, scale parameters, and safeguard measures to mitigate systemic risk.
Externally, China plans to use the upcoming Shanghai Cooperation Organisation summit to engage partner countries on cross-border stablecoin integration, exploring bilateral corridor models and multilateral payment networks. The initiative reflects a growing recognition that programmable digital assets can reduce transaction costs, accelerate settlement speeds, and strengthen the yuan’s appeal to global exporters and financial institutions seeking alternatives to traditional correspondent banking channels. Given the yuan’s global payment share has declined to under 3%, policymakers view stablecoins as a catalyst for reversing that trend by facilitating 24/7, borderless value transfers backed by China’s substantial foreign exchange reserves.
Market participants caution that capital controls remain a significant hurdle, requiring innovative compliance architectures such as geofencing, on-chain monitoring, and smart contract–based compliance checks. Nonetheless, China’s pivot aligns with parallel efforts in South Korea and Japan to launch fiat-backed digital currencies, underscoring a regional shift toward regulated stablecoin ecosystems. Observers expect the new framework to establish China as a global digital finance hub, foster competitive dynamics among tech firms and financial institutions, and ultimately reshape the architecture of cross-border payments in the era of blockchain–enabled currencies.
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