The Real Game: China's Stablecoin Move vs. the USD's Global Grip

After a decade of strict crypto restrictions, China appears poised for a dramatic policy reversal. According to recent reports, Beijing’s State Council is reviewing a roadmap that could greenlight yuan-backed stablecoins as early as this month—signaling a fundamental shift in how the world’s second-largest economy views digital assets.

Why Now? Understanding China’s Strategic Play

The timing is no coincidence. While the United States accelerates stablecoin adoption through frameworks like the GENIUS Stablecoin Act, China recognizes stablecoins as a critical tool for yuan internationalization. Senior officials are reportedly scheduled to hold a study session by month’s end focused on stablecoin policy direction and application boundaries.

This isn’t just about embracing crypto. It’s about currency dominance. As USD-pegged tokens gain traction globally, Beijing views yuan-backed stablecoins as the counterweight needed to reduce American financial hegemony.

The Reality Check: Numbers Tell the Story

Here’s where the challenge becomes clear. According to SWIFT data from June, the yuan’s share of global payments hit just 2.88%—its lowest point in two years. Meanwhile, the U.S. dollar commands 47.19% of international transactions.

China’s entrenched capital controls compound the problem. The government continues to restrict cross-border money flows, permitting only limited transfers through designated schemes targeting specific markets like Hong Kong. These barriers, combined with China’s massive annual trade surpluses, have consistently hindered yuan globalization efforts.

Policy Roadmap: What’s Being Considered

The reviewed framework outlines several key elements:

• Clear risk management guidelines for stablecoin operators
• Defined roles for domestic regulators in oversight and compliance
• Strategic promotion of yuan-denominated tokens in international markets
• Application boundaries and development framework for the stablecoin ecosystem

Central bank officials have already signaled their support, urging the government to accelerate stablecoin adoption as a response to USD dominance in crypto markets.

The Larger Geopolitical Picture

This stablecoin initiative reflects a broader strategic pivot. Since 2021, when China banned cryptocurrency trading and mining, officials have maintained their skepticism about decentralized finance. Yet the rise of dollar-linked cryptocurrencies in global finance has forced a recalculation.

The question now: can yuan-backed stablecoins overcome structural obstacles like capital controls to meaningfully compete with USD-pegged alternatives? If approved, this roadmap would test whether blockchain technology can bypass the geopolitical constraints that have long limited the yuan’s international reach.