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- The State Council will review the plan for introducing Yuan-backed stablecoins later this month, with Hong Kong and Shanghai expected to lead implementation efforts.
- The move comes as the yuan’s share in global payments fell to 2.88%, while U.S. dollar-backed stablecoins dominate over 99% of the $247 billion global stablecoin market.
Following the US acceleration on a stablecoins framework, China is also weighing on Yuan-backed stablecoin to expand its global footprint. This marks a major pivot from China’s stringent stand on digital assets, while mining crypto trading and mining in 2021.
Sources familiar with the matter told Reuters that the State Council will review its stablecoin plan later this month. The key objective here is to boost the global use of Yuan, while developing regulatory roles for domestic market players.
The sources also mentioned that Hong Kong and Shanghai are reportedly set to take the lead in local implementation efforts, according to sources. As reported earlier this month, China is also pilot testing its stablecoin launch in the crypto-friendly jurisdiction of Hong Kong.
Additionally, China is expected to address the expansion of yuan usage and explore the potential role of stablecoins in cross-border trade during the Shanghai Cooperation Organisation Summit in Tianjin, scheduled for August 31 to September 1.
Eyeing A Share of Global Stablecoins Market
Back in June, the share of Chinese Yuan in global payments dropped to 2.88%, hitting the lowest in two years, while the dominance of the US Dollar remained stable at 47.19%. This drop comes as dollar-backed stablecoins command over 99% of the $247 billion global stablecoins market, which is projected to grow to $2 trillion by 2028.
The shift underscores how geopolitical currency competition is shaping policy moves, with China now showing openness to adopt the previously restricted technologies in order to counter US dominance. Despite this, China’s strict capital controls remain a major hurdle. Current connect schemes enable only limited offshore flows, and widespread adoption of a yuan-backed stablecoin would require significantly greater cross-border flexibility.
China’s digital payments ecosystem, which processes $17 trillion annually across 890 million mobile users, provides a strong base for swift stablecoin adoption. Alipay and WeChat Pay, commanding 93% of the mobile payment market, could seamlessly integrate yuan-backed stablecoins into existing payment habits.
Beijing’s latest move follows a meeting held by a Shanghai regulator last month, where local officials discussed strategic responses to stablecoins and digital currencies. In a recent interview, PBOC advisor Huang Yiping suggested that launching an offshore yuan stablecoin in Hong Kong is “a possibility.”
Meanwhile, Hong Kong’s long-awaited stablecoin ordinance came into effect on August 1. This makes the Chinese-controlled territory one of the first markets worldwide to regulate fiat-backed stablecoin issuers. As reported by CNF, another Asian country Japan, is also considering the launch of Yen-backed stablecoins, as per the new FSA rules.
