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

According to Circle CEO Jeremy Allaire, China may launch a yuan-backed stablecoin in the next three to five years, as digital currencies become increasingly integral to global trade and finance. Allaire made this statement to Reuters in Hong Kong, highlighting the vast opportunity for such a stablecoin. This prediction marks a significant shift from a speculative idea to a more concrete policy alignment, as Chinese officials were reported to be exploring a yuan-backed stablecoin in August 2025 to boost international adoption. Notably, this comes after China banned crypto trading and mining in 2021. Allaire has been advocating for stablecoins as a means to internationalize the RMB since at least 2023, arguing they could outperform central bank digital currencies. However, for a yuan stablecoin to be launched, China would need to make the RMB fully convertible, allowing foreigners and markets to freely exchange yuan without strict government restrictions on capital flows. Currently, capital controls remain a crucial aspect of Chinese economic policy, and a stablecoin backed by the offshore yuan is distinct from one backed by the onshore yuan, with the former complying with existing controls and the latter not. The timeline for this development hinges on whether China views stablecoins as a viable 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 dominating the market.