China is considering issuing a stablecoin pegged to the yuan to enhance the global power of this currency while competing with USD stablecoins in the context of increasing competition for leadership in international digital payments.
The move to open up to stablecoins shows that Beijing may shift its policy and change the balance of influence in the digital financial market, even though it had previously tightened cryptocurrency regulations.
MAIN CONTENT
China is considering issuing a yuan-pegged stablecoin to enhance its global monetary position.
The emergence of the yuan stablecoin faces fierce competitive pressure from USD stablecoins and U.S. policies.
Developments in China and regions like Hong Kong indicate that the global race for stablecoins is accelerating rapidly.
Is China really changing its digital asset policy?
China has the potential to make significant changes in its digital asset policy by opening up to stablecoins.
Citing Reuters (2025): Beijing is officially considering issuing a yuan-pegged stablecoin to enhance the currency's role in global finance.
Reuters, 2025
This is the first time China is considering the legalization of stablecoins, despite having issued a ban on cryptocurrency trading and mining since 2021, only allowing the use of the central bank's digital yuan. This reflects a new trend as regulators recognize the potential of stablecoins for speed of payment, low cost, and 24/7 transaction capability.
If the new proposal is approved by the State Council, the yuan stablecoin could enhance the global acceptance of the currency while supporting cross-border trade. However, China will need to tightly control risks through the new regulatory framework.
What does the proposal for developing the yuan stablecoin mean?
This proposal is a historical milestone, promoting the digitization and internationalization of the yuan.
China is expected to submit a proposal to the State Council by the end of the month, including regulatory responsibilities and risk control measures for stablecoins pegged to the yuan, aiming to accelerate the adoption of the domestic currency beyond its borders.
If approved, this is China's first official step towards allowing stablecoins, laying the groundwork for competition with USD stablecoins.
According to Reuters, 2025
This move breaks the precedent of tightening cryptocurrency regulations over the years while also opening a more flexible approach to technological innovation in digital finance. Observers now believe that opening up stablecoins will help China diversify its cross-border payment tools and reduce reliance on the USD.
Can the yuan stablecoin compete with USD stablecoins?
The direct competition between the yuan stablecoin and USD stablecoins will be extremely fierce as the USD still dominates.
According to SWIFT data from June 2025: The share of global payments made in yuan fell to 2.88%, the lowest in two years, while the USD accounted for 47%.
SWIFT RMB Tracker, 2025
In the stablecoin market, according to CoinMarketCap, nearly 98% of the total market capitalization of $288 billion is in USD-pegged stablecoins like USDT and USDC, showing the overwhelming advantage in liquidity, reliability, and the ecosystem of the USD. If the yuan stablecoin is implemented, the goal is to promote cross-border trade and reduce reliance on USD stablecoins in international payments.
However, experts warn that significant challenges arise from market size, trust in the yuan, and Beijing's strict capital control policies. The success of the yuan stablecoin will depend on the level of acceptance from foreign partners and risk monitoring mechanisms.
Why is China 'rushing' to implement stablecoins at this time?
China is under significant geopolitical pressure as the United States pursues strong stablecoin initiatives to bolster the USD's position.
Under President Donald Trump's administration, the United States promoted the GENIUS Act to support legally regulated stablecoins, continuing to increase the global influence of the USD in the digital asset ecosystem. Furthermore, President Joe Biden and federal agencies are also advocating for the completion of the legal framework against the abuse of stablecoins, protecting investors and preventing systemic risks.
New policies in the United States have increased pressure to maintain the global position of the USD, forcing China to adjust its digital yuan strategy.
Reuters, 2025
In a public response in June 2025, a senior official from the People's Bank of China acknowledged that stablecoins could change the international payment system and reshape the roles of major currencies in the world. In July of the same year, the Conflux blockchain network tested the issuance of an offshore yuan-pegged stablecoin, demonstrating that domestic businesses are ready.
How do regional and global developments affect China?
Changes in neighboring markets create pressure and also provide an opportunity for China to quickly adapt and assert its position.
On August 1, 2025, Hong Kong officially implements the stablecoin regulatory framework, expressing its ambition to become the world's leading controlled digital asset innovation center. In the United States, the Treasury continues to expand public consultation on how to regulate stablecoin activity under the GENIUS Act, while Wyoming becomes the first state to issue a legalized digital USD.
Parallel developments in the United States, Hong Kong, and China indicate that the race for stablecoins and digital finance innovation is accelerating on multiple fronts.
CoinMarketCap, SWIFT, 2025
These steps promote competition not only in technology but also in legal models and policies regarding digital assets. This competition will determine whether the yuan can play an important role in the era of global stablecoins.
What potential does the yuan stablecoin bring to China?
The yuan stablecoin will enhance China's international financial status if implemented effectively.
Criteria Yuan Stablecoin USD Stablecoin (USDT, USDC) Total market capitalization (2025) Not determined Nearly $288 billion International payment market share 2.88% 47% Implementation timeline Expected by the end of 2025 Already globally commercialized Cross-border access Developing framework Completed, widely disseminated
Theoretically, the yuan stablecoin could help Chinese businesses operate more smoothly in international trade, reducing currency conversion costs and reliance on the USD. However, opening up the stablecoin also forces Beijing to strengthen capital control measures to prevent capital flight from the domestic market.
What are the risks and challenges when China issues a yuan-pegged stablecoin?
China faces significant risks regarding capital control, market trust, and international barriers when issuing stablecoins.
Strict capital control policies have always been a financial pillar of China; the issuance of stablecoins will require a balance between promoting global payments and controlling the risk of illegal capital outflows. Moreover, trust in the yuan is hindered by a lack of transparency in international financial information, and some foreign partners still prefer to use the strongest currency in the world, the USD, for large transactions.
Additionally, regulations in developed countries regarding anti-money laundering and financial control have tightened the acceptance of payments via Chinese stablecoins, forcing Beijing to reference the practices and legal frameworks of the United States, EU, and Hong Kong when building domestic solutions.
Frequently asked questions about the yuan stablecoin
What is the yuan stablecoin?
This is a digital asset pegged to the value of the yuan with the goal of supporting 24/7 payments and cross-border trade, helping to increase the international influence of the Chinese currency.
Will China allow all cryptocurrency activities?
No, China has tightened most activities related to cryptocurrency trading and mining since 2021, only considering opening up the yuan stablecoin with strict controls.
What is the current market share of USD and yuan stablecoins?
USD-pegged stablecoins account for nearly 98% of the global market with a total capitalization of about $288 billion, while the yuan stablecoin is preparing a testing framework.
What are the main challenges facing the yuan stablecoin?
China faces capital control, international market trust, and fierce competition with strong stablecoins like USDT and USDC.
How are Hong Kong and other countries responding to stablecoins?
Hong Kong is leading the region by implementing a stablecoin regulatory framework from August 1, 2025; the United States continues to update laws to regulate stablecoins and maintain the USD's role.
When is the yuan stablecoin expected to be implemented?
China may submit a proposal by the end of the month, but the official implementation timeline depends on approval from the State Council and the completion of the regulatory framework.
What benefits will Chinese businesses gain when the yuan stablecoin is launched?
Businesses benefit from faster payments, lower fees, and reduced reliance on the USD when conducting international trade.
Source: https://tintucbitcoin.com/stablecoin-nhan-dan-te-canh-tranh-my/
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