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China is weighing a plan to launch yuan-backed stablecoins in an effort to expand the global reach of its currency. The discussions, reported by Reuters through unnamed insiders, suggest the country could soon make its first official push into a digital asset market long dominated by the US dollar.
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For years, China has restricted most digital asset activity, focusing instead on its central bank digital currency (CBDC), the digital yuan. But according to sources cited in the Reuters report, the State Council is now preparing to review a roadmap that would open the door for stablecoins pegged to the yuan.
If approved, regulators and the People’s Bank of China (PBOC) would be tasked with managing the rollout. Public details of the plan are expected in the coming weeks.
The stablecoin market has grown to $281 billion, nearly all of it pegged to the US dollar. Companies behind tokens like Tether and USDC keep their reserves in safe assets such as US Treasury bills. That structure has created fresh demand for US debt, with some analysts suggesting stablecoins could, over time, play a role in propping up bond markets.
David Sacks, who serves as the White House’s crypto advisor, has previously said:
“…the [stablecoin] float is expected to grow from, call it, roughly $250 billion to trillions of dollars. And that would create more demand for the US dollar internationally. I think you could see other economies start to dollarize from the bottom up as their citizens would prefer to use US digital dollars as opposed to whatever fiat currency they’re using. And that would create potentially trillions of dollars of new demand for US treasuries.”
China’s potential entry into the space directly challenges that narrative, offering an alternative to dollar-based tokens.
The key question now is how a yuan-pegged stablecoin would be structured. Would it be fully backed by reserves like USDT or USDC, or tied into the country’s existing digital yuan system? Those details are not yet clear.
What is clear is that Beijing views stablecoins as another front in the battle for monetary influence. By introducing a yuan-backed option, China could provide global traders, businesses, and even individuals with a new way to settle payments outside the dollar system.