China eyes yuan-backed stablecoins as Hong Kong and Shanghai pilots

China is moving toward allowing yuan-backed stablecoins for the first time, a shift that could broaden the currency’s international footprint while contending with strict capital controls and entrenched dollar reliance. A government roadmap on yuan internationalization and stablecoin usage is expected to be reviewed by the State Council later this month, with pilots anticipated in Hong Kong and Shanghai. The plan would assign regulatory responsibilities, outline risk controls, and task the central bank, the People’s Bank of China, with implementation, signaling a coordinated, state-led approach to a market long dominated by dollar-pegged tokens issued by private firms.

Beijing’s consideration comes after years of a crypto crackdown on private digital assets, contrasted with deliberate steps to expand official digital currency use. China launched the digital yuan, or eCNY, in trial form in 2019 and has since pushed its use in daily transactions and cross-border business through controlled channels. The new roadmap appears to seek a bridge between the traditional, state-controlled monetary framework and the rapidly evolving global stablecoin ecosystem, which is currently...