Beijing Plans Yuan Stablecoins to Counter US Dollar Supremacy

China is preparing to introduce yuan-backed stablecoins, signaling a dramatic policy shift aimed at expanding the currency’s global influence.

What Happened?

Multiple sources confirm that China’s State Council is expected to review a roadmap for launching yuan-backed stablecoins, potentially by the end of August. This represents a major reversal from Beijing’s 2021 ban on all cryptocurrency activities and marks a calculated pivot toward using stablecoins to elevate the yuan’s role in global finance.

A Big Shift in China’s Crypto Strategy

China has maintained a strict anti-crypto stance since 2021, citing concerns over financial system stability. But recent reports suggest a change in direction. The new plan would authorize yuan-backed stablecoins as part of a broader strategy to internationalize the Chinese currency and reduce reliance on the US dollar in cross-border transactions.

This is bullish!

According to Reuters, China may approve yuan-backed stablecoins later this month. pic.twitter.com/eVzfbAQQN5

— MANDO CT 🇮🇪 🇦🇪 🇬🇧 (@XMaximist) August 20, 2025

• The yuan currently holds just 2.88 percent of global payment share, down to its lowest level in two years, while the US dollar commands over 47 percent, according to SWIFT.
• Dollar-backed stablecoins dominate with more than 98 percent of the $288 billion stablecoin market. China wants to challenge that balance.

The State Council’s plan reportedly sets specific targets for yuan adoption in global markets. It also assigns implementation roles to key regulatory bodies, including the People’s Bank of China, and includes risk management guidelines for the emerging sector.

Hong Kong and Shanghai to Lead Implementation

China is not acting alone. Hong Kong and Shanghai will serve as testing grounds for the stablecoin rollout:

• Hong Kong’s stablecoin ordinance came into effect on August 1, creating a regulated environment for fiat-backed stablecoin issuers.
• A PBOC advisor noted that offshore yuan stablecoins in Hong Kong are a real possibility, reinforcing the region’s strategic importance.
• Shanghai is setting up a center for international digital yuan operations, enhancing its role in cross-border testing.

Don't chase the news. Let us curate it.

You get one weekly briefing with only the stories that matter. If the market is quiet, we skip it.

Email address

Get the Weekly Briefing - it's free!

✅ Join readers from Visa, Vanguard, and the FDIC.

Stablecoins as a Tool for Cross-Border Trade

The policy shift aligns with China’s goal of reducing dependence on the US-led financial system. One application under review is the use of yuan-backed stablecoins for cross-border payments with partner countries.

These plans are expected to be formally discussed at the Shanghai Cooperation Organisation (SCO) Summit, which will take place in Tianjin from August 31 to September 1. The summit may include talks on expanding the yuan’s use in trade settlements and integrating stablecoins into payment systems.

Digital Payments Ecosystem Provides a Launchpad

China’s well-developed digital payment infrastructure offers a major advantage in adopting stablecoins quickly:

• China processes more than $17 trillion annually through 890 million mobile users.
• Blockchain platforms like Conflux have already begun experimenting with stablecoins backed by offshore yuan.

Geopolitical Motivation Behind the Pivot

This policy reversal appears directly influenced by global competition. With President Donald Trump supporting stablecoin expansion in the US, China may be taking a defensive stance to ensure its currency remains competitive on the world stage.

Pan Gongsheng, Governor of the People’s Bank of China, has also stated plans to weaken global over-reliance on a single sovereign currency, signaling a broader effort to diversify international monetary systems.

CoinLaw’s Takeaway

Honestly, I find this move by China both surprising and strategic. After slamming the brakes on crypto in 2021, they are now speeding toward stablecoins as a tool for influence. In my experience covering digital finance, few things spur government action faster than the fear of losing global leverage. The dominance of dollar-backed stablecoins is clearly seen as a threat, and Beijing’s response is not just a financial one, but a geopolitical counterpunch. The real test will be whether China can implement these plans while maintaining its strict capital controls. If they pull it off, it could reshape how we think about digital money in international trade.