Beijing Flirts With Stablecoins: A Policy Shift That Could Reshape Global Finance

China's State Council is set to review a roadmap in August that includes yuan-backed stablecoins, signaling a potential shift in strategy to internationalize the renminbi. This move marks a departure from Beijing's 2021 crypto ban and its reliance on the state-run digital yuan (e-CNY), which has seen limited global adoption.

The dominance of dollar-backed stablecoins like Tether (USDT) and USDC in cross-border payments and crypto markets has forced China's hand. With the U.S. dollar accounting for 47% of global payments and 98% of the stablecoin market, Beijing views yuan-backed stablecoins as a defensive maneuver in the ongoing currency wars.

The upcoming SCO Summit may serve as the first battleground for this new approach, as China seeks to leverage blockchain technology rather than state decrees to expand the yuan's global footprint.