China Prepares to End Decade-Long Crypto Ban With Yuan-Backed Stablecoin Strategy

Beijing is set for a major policy reversal on digital assets. Recent developments indicate that China’s government is moving toward lifting its longstanding cryptocurrency restrictions while simultaneously championing yuan-backed stablecoins as a tool for international currency expansion. According to reports from major news outlets, China’s State Council is expected to review and potentially greenlight a comprehensive roadmap designed to accelerate the global adoption of the yuan through blockchain-based financial instruments.

This strategic pivot marks a dramatic departure from the country’s 2021 stance, when authorities cracked down on crypto trading and mining operations citing financial stability concerns. Now, officials are reframing digital currency development as an essential component of economic statecraft.

Strategic Shift in Digital Asset Policy

The proposed roadmap outlines a multi-pronged approach to stablecoin governance, with clear guidelines for risk management and regulatory oversight from domestic authorities. Senior government officials are preparing to conduct a high-level policy session to chart the course for stablecoin development and establish boundaries for their application across different business sectors.

China’s central bank officials have been particularly vocal about the urgency of the shift, openly calling for the government to accelerate stablecoin initiatives. This represents a dramatic reversal from years of blanket restrictions on crypto activities. The government now recognizes that sitting on the sidelines while the digital currency landscape evolves could leave Beijing disadvantaged in the emerging fintech era.

Yuan’s Global Challenge and Capital Control Constraints

Despite Beijing’s ambitions to establish the yuan as a reserve currency comparable to the dollar or euro, significant structural obstacles remain. According to SWIFT data from June 2025, the yuan accounted for only 2.88% of global cross-border payments, marking a two-year low. Meanwhile, the U.S. dollar maintained overwhelming dominance with a 47.19% share, reflecting deep structural advantages rooted in decades of financial infrastructure development.

China’s strict capital controls present another major hurdle. The government permits cross-border fund flows primarily through limited channels targeting specific markets like Hong Kong, preventing the free movement of capital that typically facilitates broader currency adoption. These restrictions could significantly impede the growth trajectory of yuan-denominated stablecoins, market experts caution.

US Dollar Dominance and the Stablecoin Battleground

The timing of China’s policy recalibration is hardly coincidental. The United States is simultaneously escalating its own stablecoin agenda through legislative measures designed to entrench dollar-backed digital tokens in the global financial system. This emerging competition underscores a fundamental reality: stablecoins are rapidly becoming a proxy battleground for currency hegemony.

Beijing increasingly views stablecoins as a strategic instrument for advancing yuan internationalization, particularly as U.S. dollar-linked cryptocurrencies continue expanding their foothold in cross-border transactions and emerging markets. By legitimizing and promoting yuan stablecoins, China aims to create an alternative pathway for global commerce that bypasses traditional dollar-dominated clearing systems.

The policy recalibration reflects how geopolitical competition is reshaping the future of finance. As China moves to lift its crypto ban and promote stablecoin adoption, the stage is set for an intensifying contest between the world’s two largest economies over the architecture of digital money itself.