tl;dr
China is considering yuan-backed stablecoins, with the State Council reviewing a roadmap on currency internationalization and stablecoin regulation. The plan assigns oversight to the People's Bank of China and includes pilot projects in Hong Kong and Shanghai, signaling a shift from the 2021 crypto ...
China is exploring yuan-backed stablecoins for the first time, with the State Council scheduled to review a roadmap on currency internationalization and stablecoin usage later this month. This plan aims to designate regulatory responsibilities, implement risk controls, and assign the People’s Bank of China (PBOC) the task of overseeing execution. Pilot projects are anticipated in Hong Kong and Shanghai, marking a significant shift from China’s 2021 ban on crypto trading and mining.
This initiative aligns with China’s broader goal to increase the yuan’s use in cross-border payments, where dollar stablecoins have long dominated crypto settlement rails, accounting for over 99% of global stablecoin supply. The forthcoming roadmap will likely be accompanied by senior leadership guidance on commercial use boundaries, with additional discussions about yuan use in trade planned around the Shanghai Cooperation Organization summit in Tianjin from August 31 to September 1.
However, policymakers must navigate China’s capital controls, which limit how any yuan-referenced token could legally circulate offshore rather than onshore. Despite these challenges, a stablecoin designed to maintain convertibility and compliance could support regional trade invoicing and settlement. Key design decisions around custody, redemption, and reserve makeup will influence both market acceptance and regulatory approval.
Hong Kong is set to become a focal point for structured stablecoin experimentation. From August 1, the city’s licensing regime for fiat-referenced stablecoin issuers will take effect, supported by detailed supervision, anti-money laundering (AML) guidelines, and application procedures published by the Hong Kong Monetary Authority (HKMA). Corporate interest is rising, with entities like Ant International planning to apply for licenses as soon as applications open, signaling strong market momentum.
This regulatory framework offers a pathway for yuan-pegged stablecoins to operate offshore while connecting to mainland payment infrastructure through tightly controlled channels. The global stablecoin market is sizeable, recently hovering around the mid-$200 billion mark, with forecasts varying widely—from optimistic $2 trillion estimates by 2028 to more conservative $500 billion forecasts by J.P. Morgan, which notes payments make up a small fraction of demand.
For a yuan stablecoin to gain traction, its issuance architecture must emphasize transparency, redemption at par, reserve quality, and compatibility with existing e-CNY pilot programs. It must also align with China’s balance-of-payments policies. An offshore yuan stablecoin could feature ring-fenced reserves and robust redemption mechanisms to facilitate cross-border trade settlement, treasury functions, and market-making, while onshore convertibility remains managed by quotas and banking controls.
Market participants will closely observe how regulatory duties are allocated among the PBOC, securities and banking regulators, and local authorities in Hong Kong and Shanghai. The policy rollout is expected to proceed with Hong Kong’s licensing ordinance coming into effect, issuers preparing their applications, mainland authorities defining supervision parameters, and coordinated cross-border pilots targeting trade hubs.
The State Council’s review later in August will set the trajectory for the next stages, guiding how yuan-backed stablecoins might reshape regional finance and China’s role in the digital currency landscape.