- China is reportedly speeding up its roadmap for the rollout of a yuan-backed stablecoin.
- The State Council aims to use the asset to reduce Chinese reliance on the US dollar and broaden the reach of the yuan in the global market.
China is reportedly looking to introduce a Chinese yuan-backed stablecoin. It comes despite years of piloting a Central Bank Digital Currency (CBDC) and its restrictions on cryptocurrencies.
Plans for a Yuan-Backed Stablecoin
Citing sources familiar with the matter, Reuters claimed that the move aims to better position the yuan in the world market as an alternative to dominant currencies such as the US dollar and the euro. The initiative is already under review by the country’s State Council.
The source believes the body may approve its roadmap before the end of August. The plan’s priorities include ways to prevent the use of the yuan-backed stablecoin for illegal activities and means to counter the USA’s stablecoin progress.
The source expects Chinese officials to lay out more details about the subject at the Shanghai Cooperation Organization (SCO) Summit between August 31 and September 1 in Tianjin.
US Government Doubling Down on Stablecoins
The move could explain why the US is doubling down on the stablecoin market recently, with the US Treasury already seeking public comments on the GENIUS Act long before its enforcement in 2027. On Tuesday, several crypto community members questioned Treasury Secretary Scott Bessent about why the US is so determined to push for the adoption of stablecoins. The latest developments in China could be one of the many reasons why the administration of President Donald Trump is pumping the gas in its stablecoin advance.
The GENIUS Act requires issuers of US dollar stablecoins to register and back their digital assets with at least a 1:1 ratio of high-quality liquid assets, including US dollars, bank deposits, and treasuries. As we have reported earlier, the growth of the stablecoin market means a sustained, global demand for US debt. It would expand its reach not only to institutions but also to individuals using crypto or stablecoins. The Chinese State Council, recognizing the strategic advantage of stablecoins, appears to be steering toward the same playbook as its Western rival.
Yuan Growth in Global Trade
J.P.Morgan admitted in a report last month that the utility of the US dollar in global trades has significantly declined over the past three decades. In contrast, the yuan has steadily gained significant traction.
In relation to this, SWIFT’s tracker indicates that the US dollar has maintained a 47.19% share in global payments as of June this year. The yuan only had a 2.88% slice of the pie.
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