China, one of the most restrictive global jurisdictions for cryptocurrencies, is reportedly considering allowing Chinese yuan-backed stablecoins in what would be a major policy reversal.

Chinese authorities may authorize yuan-backed stablecoins for the first time to promote global use of its currency, Reuters reported on Wednesday, citing sources familiar with the matter.

If approved, China’s plan for stablecoin use would mark a major shift in its approach to crypto after the country banned crypto trading and mining in September 2021.

The news followed multiple reports suggesting that mainland China had been warming up to stablecoins amid a US stablecoin push in 2025.

Cross-border implementation

According to the sources, China’s State Council will review and potentially approve a roadmap later in August to expand global use of the yuan. The plan reportedly includes steps to counter US progress on stablecoins and guidelines for risk prevention.

One use case for a potential yuan-backed stablecoin from mainland China would be the implementation of stablecoins for cross-border trade and payments with some countries.

This issue is expected to be discussed at the Shanghai Cooperation Organization (SCO) Summit that will be held between Aug. 31 and Sept. 1 in Tianjin.

Hong Kong and Shanghai have been identified as priority hubs for rolling out the policy, according to the sources.

Yuan ranks sixth in global payments

China’s potential entry into the stablecoin market would align with its ambitions to globalize the yuan and help it compete with key global reserve currencies such as the US dollar and the euro.

As of June, China’s yuan was the sixth most active currency for global payments by value, with a share of around 2.9%, according to Swift’s RMB Tracker.

As reported, in June, mainland China had been exploring new ways for foreign institutions to use the yuan amid the US Dollar Index plummeting 9%.

Related: China Merchants Bank subsidiary launches crypto exchange in Hong Kong

At the time, People’s Bank of China (PBOC) Governor Pan Gongsheng outlined the plan to “weaken the excessive reliance on a single sovereign currency” and set up a center for digital yuan internationalization in Shanghai.

US dollar stablecoins dominate market at 98%

While the US dollar makes up 47.2% of global payments, its role is far bigger in the stablecoin market, where dollar-backed tokens represent almost 98% of $288 billion in the total stablecoin market capitalization, according to CoinMarketCap.

With President Donald Trump pledging to expand the dollar’s global reach by promoting stablecoins, many jurisdictions worldwide have raised concerns, including China.

In June, a PBOC official acknowledged the transformative potential of emerging technologies like stablecoins in global payment systems, intensifying calls for regulatory approval of yuan-backed stablecoins.

In July, Conflux, a local blockchain platform, introduced a new stablecoin backed by offshore Chinese yuan.

Neighboring jurisdictions like Hong Kong have also taken steps toward stablecoin approval, launching a dedicated regulatory framework on Aug. 1

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