China May Introduce Yuan-Backed Stablecoin Within 3-5 Years Amid Currency Competition

According to Circle CEO Jeremy Allaire, China is likely to launch a yuan stablecoin in the next three to five years, as digital currencies increasingly become integral to global trade and finance. This prediction was made during an interview with Reuters in Hong Kong, where Allaire emphasized the vast potential for a yuan-backed stablecoin. The notion marks a shift from a speculative concept to a more policy-oriented approach, following reports in August 2025 that Chinese officials were exploring the possibility of a yuan-backed stablecoin to enhance international adoption. Notably, China has banned cryptocurrency trading and mining since 2021. Allaire has been advocating for stablecoins as a means to facilitate RMB internationalization since at least 2023, arguing that they could outperform central bank digital currencies. Initially, Beijing's stance seemed firmly opposed, with authorities arresting individuals linked to an offshore yuan stablecoin and reiterating restrictions on virtual currencies. However, the perception of stablecoins has evolved, with them now being viewed as financial infrastructure for cross-border settlement rather than speculative crypto products. For China to introduce a yuan stablecoin, it would need to make the RMB fully convertible, allowing foreigners and markets to freely exchange yuan without stringent government restrictions on capital flows. Experts agree that full convertibility is a prerequisite for a yuan stablecoin. Currently, capital controls remain a crucial aspect of Chinese economic policy, and a stablecoin backed by the offshore yuan (CNH) would be distinct from one backed by the onshore yuan (CNY), with the former complying with existing controls and the latter not. The timeline proposed by Allaire depends on whether China views stablecoins as a workaround or a long-term commitment. As of now, the global stablecoin market is valued at nearly $315 billion, with privately issued dollar-pegged tokens such as Tether USDT and USD Coin (USDC) accounting for the majority of the total value.