China is considering permitting the use of yuan-backed stablecoins for the first time in a move that could support wider international adoption of its currency, according to people familiar with the matter.

If approved, the plan would represent a significant reversal of Beijing’s position on digital assets.

Reuters reported that the State Council, China’s cabinet,  is set to review and potentially approve a roadmap later this month to expand the use of the yuan globally, partly to keep pace with US efforts on stablecoins.

The plan is expected to outline targets for the yuan’s use in global markets, specify the responsibilities of domestic regulators, and set guidelines for risk management, the sources said.

Senior Chinese leaders are also expected to hold a study session by the end of the month focused on yuan internationalisation and stablecoins.

One source said the meeting is likely to include remarks that will define the scope of stablecoin applications in business.

The initiative, if endorsed, would mark a policy shift after China banned cryptocurrency trading and mining in 2021 over concerns about financial stability.

Despite its status as the world’s second-largest economy, China has struggled to elevate the yuan’s global role, constrained by strict capital controls and large annual trade surpluses.

These restrictions may also pose challenges for stablecoin development, according to market participants.

Stablecoins are a type of cryptocurrency designed to maintain a stable value, typically pegged to fiat currencies such as the US dollar.

They are widely used to move funds between digital tokens. In June, the yuan’s share of global payments fell to 2.88%, its lowest level in two years, according to payment platform SWIFT, while the US dollar accounted for 47.19%.

Beijing maintains tight capital controls, though some cross-border flows are allowed through schemes with offshore markets such as Hong Kong.

In contrast, US President Donald Trump endorsed stablecoins shortly after taking office in January and is pushing for a regulatory framework to support dollar-pegged cryptocurrencies.

Supporters argue that the blockchain technology underpinning stablecoins enables instant, low-cost, cross-border transfers, raising the possibility of disrupting traditional payment systems.

Sources told Reuters that Chinese authorities view stablecoins as a potential tool for advancing yuan internationalisation amid the dominance of dollar-linked tokens in global finance.

Details of the plan are expected in the coming weeks, with regulators including the People’s Bank of China (PBOC) tasked with implementation, according to the sources.

US dollar-backed stablecoins currently account for more than 99 per cent of the global supply, the Bank for International Settlements has said.

In Asia, South Korea has committed to allowing won-backed stablecoins, while Japan is developing similar frameworks.

The discussions come against a backdrop of heightened geopolitical tensions with Washington and the increasing use of dollar-backed stablecoins by Chinese exporters.

In July, Shanghai regulators convened local officials to examine policy responses to stablecoins and digital currencies.

PBOC adviser Huang Yiping recently told local media that an offshore yuan stablecoin in Hong Kong is “a possibility”.

Hong Kong’s stablecoin ordinance, which took effect on 1 August, positions the territory among the first jurisdictions globally to regulate fiat-backed issuers.

Meanwhile, Shanghai is developing an international operations centre for the digital yuan.

According to the sources, Hong Kong and Shanghai will serve as key testing grounds for implementation.

China is also expected to discuss the use of the yuan and potentially stablecoins in cross-border trade and payments at the Shanghai Cooperation Organisation Summit in Tianjin on 31 August–1 September.

The global stablecoin market is valued at around US$247 billion, according to CoinGecko data, but Standard Chartered Bank projects it could expand to US$2 trillion by 2028.

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