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China is studying the possibility of allowing the use of stablecoins backed by the yuan for the first time.

The roadmap for yuan-backed stablecoins is expected to be discussed at the Shanghai Cooperation Organization (SCO) summit in Tianjin later this month. At the summit, China will promote wider use of its currency in trade settlements.

China is considering a stablecoin backed by the yuan

According to Reuters, the State Council will review a roadmap later this month to expand the internationalization of the yuan, including stablecoin experiments in Hong Kong and Shanghai.

If approved, the plan will set regulatory guidelines, risk controls, and usage goals to counter the overwhelming dominance of dollar-linked tokens.

China's move comes as Washington advances in regulating stablecoins under President Trump. Dollar-backed currencies are enhancing their role in digital currency trading and cross-border payments.

Stablecoins are digital tokens designed to maintain a stable value, typically pegged to a fiat currency. The global market is currently valued at about $276 billion, with over 99% linked to the US dollar, according to the Bank for International Settlements.

Hong Kong and Shanghai in the limelight

Implementation will be accelerated in Hong Kong, which issued the long-awaited stablecoin law on August 1, and in Shanghai, which is building an international center for digital yuan operations.

Both cities are expected to play a crucial role in the overseas deployment of yuan-denominated stablecoins.

Analysts see the initiative as part of Beijing's broader push to counter American financial dominance. Chinese exporters are already widely using dollar-backed stablecoins, a trend that highlights the limited reach of the yuan in global payments.

If adopted, the decision would represent the biggest reversal since Beijing's 2021 ban on cryptocurrency trading and mining. While capital controls remain a structural hurdle, yuan-backed stablecoins could give China new leverage in global finance, especially in Asia, where Japan and South Korea are also moving forward with experiments of fiat-backed tokens.

Further details are expected as Chinese policymakers conclude their consultations.

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