Key Notes
- Beijing sees stablecoins as a tool for Yuan internationalization amid U.S.
- dominance in dollar-backed digital assets.
- However, capital controls remain a challenge, with the Yuan’s share of global payments falling to 2.88% in June.
- China’s stepping into the crypto space could boost overall global adoption.
The latest reports suggest that China is planning to lift the crypto ban after a decade and push for the adoption of yuan-backed stablecoins.
Reuters reports that China’s State Council will review and may approve a roadmap later this month. The plan aims to expand the global use of the yuan.
This move comes as the United States seeks to strengthen the USD’s dominance with USD-backed stablecoins, following last month’s GENIUS Stablecoin Act.
The plan revolves around promoting the Chinese currency in global markets and outlines the roles of domestic regulators, including clear risk management guidelines.
China’s top leadership is also likely to hold a study session by the end of the month focused on yuan globalization and the growing influence of stablecoins.
During the session, senior officials are expected to outline policy direction for stablecoins and define their application and development boundaries in business.
Last month, officials from China’s central bank urged the government to promote stablecoin use amid the U.S.’s lead.
China’s Stablecoin Push Reflects a Major Policy Shift
If approved, China’s plan to adopt stablecoins would signal a significant shift in its stance on digital assets. The country banned cryptocurrency trading and mining in 2021 over concerns about financial stability.
Beijing has long aimed to establish the yuan as a global currency, on par with the U.S. dollar and the euro.
However, strict capital controls and large annual trade surpluses have hindered progress. These restrictions could also pose a major challenge to stablecoin development, market participants noted.
The yuan’s share of global payments fell to 2.88% in June, its lowest in two years, according to SWIFT, while the U.S. dollar accounted for 47.19%.
China continues to enforce tight capital controls, allowing only limited cross-border flows through select schemes targeting markets like Hong Kong.
On the other hand, US President Donald Trump is making a strong push for stablecoins. He has also legitimized dollar-pegged tokens with the recent passing of the GENIUS Stablecoin Act.
Sources said Beijing views stablecoins as a strategic tool for yuan internationalization amid the rising dominance of U.S. dollar-linked cryptocurrencies in global finance.
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Benjamin Godfrey is a blockchain enthusiast and journalist who relishes writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain media and sites.
