China Considers First Yuan-Linked Stablecoins, Marking Policy Shift on Digital Assets: Report

China is reportedly getting closer to deciding whether it will allow the use of yuan-backed stablecoins for the first time.

According to a report by Reuters, China’s cabinet is expected to review and potentially approve a roadmap later this month aimed at promoting wider use of the yuan internationally. It said that the plan includes measures to accelerate China’s catch-up with U.S. efforts on stablecoins.

China has yet to embrace stablecoins, despite its advanced digital payments ecosystem and the rollout of the digital yuan, a central bank digital currency (CBDC). However, sources told Reuters the global dominance of dollar-backed tokens such as Tether’s USDT and Circle’s USDC has pushed Beijing to explore alternatives aimed at reducing reliance on the U.S. dollar. Retail sentiment on Stocktwits turned ‘neutral’ for USDT, up from ‘bearish’ on Tuesday, while USDC sentiment fell to ‘bearish’ from ‘neutral’ territory.

Fintech firms, including PayPal (PYPL) and Ripple, have rolled out their own fully regulated stablecoins as well— PYUSD and RLUSD, respectively.

The plan is expected to include specific targets for yuan usage in global markets and outline responsibilities for domestic regulators, the report said. The roadmap would also feature guidelines for risk prevention.

China’s senior leadership is scheduled to hold a study session as early as the end of August focused on yuan internationalization and the growing role of stablecoins worldwide, the report said. At that meeting, senior leaders are likely to deliver remarks that set the tone for stablecoin development and define the boundaries for its application in business.

If approved, the move would signal a major shift in Beijing’s approach to digital assets after China banned cryptocurrency trading and mining in 2021, citing risks to financial stability.

Read also: Bitcoin Selloff Drags Crypto Market Cap Below $4 Trillion – Cardano, XRP Hit Hardest

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