China is considering allowing the use of yuan-backed stablecoins for the first time. According to sources close to the matter, this step could be a significant milestone in Beijing’s strategy to increase the use of the yuan in the global financial system.
The Chinese State Council is expected to discuss a comprehensive roadmap this month. The plan will include stablecoin use, risk mitigation guidelines, and the responsibilities of regulatory bodies.
Additionally, the country’s top leaders will hold a special session on the internationalization of the yuan and the role of stablecoins.Although China banned crypto trading and mining in 2021, it is backing down in the face of increasing US-backed stablecoin dominance. Today, more than 99% of the global stablecoin supply is dollar-based, while the yuan’s share in global payments is only 2.88%.
Hong Kong and Shanghai will be the pilot cities for the implementation.
Hong Kong recently implemented stablecoin regulations, while Shanghai is establishing an international hub for the digital yuan.China’s plan comes at a time of heightened geopolitical tensions. Beijing will also discuss the use of stablecoins in cross-border trade and payments with some countries at the Shanghai Cooperation Organization Summit on August 31-September 1.
Although the global stablecoin market is currently worth $247 billion, banks predict that this figure could reach $2 trillion by 2028.
