China’s yuan-backed stablecoin pilot will test digital tokens pegged to the yuan under PBOC and State Council oversight to support cross-border payments and reduce dollar reliance. The pilot aims to explore regulatory controls, reserve requirements and interoperability while preserving capital controls and financial stability.
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China to pilot yuan-backed stablecoins with PBOC and State Council oversight
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Pilot focuses on reserve transparency, regulated issuers and controlled cross-border use while maintaining capital controls.
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Over 99% of current stablecoin supply is dollar-pegged; a yuan-backed token could shift market dynamics for non-dollar settlements.
Yuan-backed stablecoin pilot by China aims to test regulation and cross-border use; read analysis and implications for markets — learn more.
What is a yuan-backed stablecoin and why is China piloting it?
Yuan-backed stablecoin is a digital token designed to maintain a 1:1 peg with the Chinese yuan, backed by reserves and issued under regulatory oversight. China’s pilot aims to evaluate reserve mechanisms, issuer licensing and cross-border interoperability while safeguarding monetary control and capital restrictions.
How will the PBOC and State Council regulate the China stablecoin pilot?
The People’s Bank of China (PBOC) and the State Council will set licensing, reserve and compliance rules for issuers. Officials intend strict supervision: licensed custodial reserves, real-time reporting and anti-money-laundering controls. Pan Gongsheng of the PBOC stated that pilot trials are “essential for strengthening our financial system and addressing dollar dominance.” Plain text source: official PBOC statements.
Frequently Asked Questions
Will a yuan-backed stablecoin weaken dollar dominance in crypto?
Potentially. A yuan-backed stablecoin could offer an alternative for bilateral trade and region-specific settlements. However, global dollar dominance depends on liquidity, trust, and acceptability in international markets, which take time and cooperative regulation.
Who will be allowed to issue a yuan-backed stablecoin?
Issuance is expected to be limited to licensed entities under strict PBOC supervision, including reserve custodians and regulated financial institutions with mandatory audits and anti-money-laundering controls.
How to interpret the pilot — step-by-step
- Design phase: define reserves, peg mechanism and issuer requirements.
- Controlled launch: small-scale issuance within approved corridors and partner institutions.
- Evaluation: monitor stability, usage and systemic risk; adapt rules before wider rollout.
Key Takeaways
- Policy shift: China is moving from broad crypto restrictions to regulated stablecoin pilots to explore controlled innovation.
- Regulatory control: PBOC and State Council will enforce licensing, reserve transparency and AML measures to limit systemic risk.
- Market impact: A yuan-backed stablecoin could encourage non-dollar settlements but adoption depends on liquidity, trust and cross-border agreements.
Conclusion
The China stablecoin pilot tests yuan-backed stablecoins under PBOC and State Council oversight to balance innovation with monetary control. This initiative could reshape stablecoin denominational mix and cross-border payment options while keeping capital controls intact. Monitor official PBOC statements and regulatory updates for next steps.
Published: 2025-08-21 · Author: COINOTAG · Updated: 2025-08-21
