China has always maintained a strict control attitude towards cryptocurrency and is currently looking to relax policies, possibly allowing the use of yuan-based stablecoins for the first time to promote the international use of the yuan.
According to Reuters, if approved, the use of the Chinese yuan stablecoin will mark a significant shift in China's attitude towards cryptocurrency, which had previously banned cryptocurrency trading and mining in September 2021.
This news emerged after multiple reports, which previously indicated that despite China's ban on cryptocurrency, the country's stance on stablecoins has softened, and it is expected to be reviewed at the State Council meeting at the end of August to promote the international use of the yuan, including addressing the progress of US stablecoins.
Application of Cross-Border Payments
The potential yuan stablecoin will be used for cross-border trade and payments in some countries. This topic will be discussed at the Shanghai Cooperation Organization summit in Tianjin from August 31 to September 1.
According to sources, Hong Kong and Shanghai have been identified as priority areas for policy implementation.
Global Status of the Yuan
China's entry into the stablecoin market aligns with its goal of promoting the globalization of the yuan, which currently ranks sixth in global payment value, accounting for about 2.9%.
Meanwhile, in the global stablecoin market, the dollar dominates, holding a 98% market share. Previously, the Governor of the People's Bank of China, Pan Gongsheng, mentioned the need to reduce excessive reliance on a single currency and to establish a center for the internationalization of the digital yuan.
Former US President Trump promised to expand the global influence of the dollar through the promotion of stablecoins, which has raised concerns in many regions, including China.
In July of this year, the regional blockchain platform Conflux launched a new stablecoin supported by offshore yuan. Meanwhile, neighboring Hong Kong also launched a regulatory framework specifically for stablecoins on August 1.
