China Considers Allowing Yuan-Backed Stablecoins

The Chinese government is considering allowing yuan-backed stablecoins.

The Chinese government is contemplating the approval of yuan-backed stablecoins, according to sources cited by Reuters.

Journalists report that the State Council of China will review and potentially approve a roadmap by the end of August to expand the global use of the national currency, including the development of stablecoins.

The plan reportedly includes measures to counter the US’s progress in digital assets and recommendations for risk prevention. Hong Kong and Shanghai have been chosen as priority centers for implementing the new policy.

Local regulatory bodies, including the People’s Bank of China, will be tasked with executing the initiative. The matter will be discussed at the Shanghai Cooperation Organisation summit, scheduled for August 31 to September 1 in Tianjin.

According to SWIFT’s RMB Tracker, as of June, the Chinese yuan was the sixth most active currency in global payments, with a share of about 2.9%. The US dollar’s share exceeds 47%.

Meanwhile, USD-backed stablecoins account for nearly 98% of the total market, with a capitalization of $281 billion.

In late July, the Hong Kong Monetary Authority published final regulations for the stablecoin market, which came into effect on August 1.