China is considering permitting yuan-backed stablecoins for the first time as part of efforts to increase global adoption of its currency, according to a report from Reuters, citing sources familiar with the matter.

This potential policy shift represents a significant reversal of China's previous stance toward digital assets. The State Council, China's cabinet, is expected to review and possibly approve a roadmap later in August that would promote wider international usage of the yuan, including initiatives to compete with U.S. developments in stablecoins.

Sources indicate the plan will likely include specific targets for yuan usage in global markets and define the responsibilities of domestic regulatory bodies. The roadmap is also expected to establish guidelines for risk prevention related to these digital assets.

China's senior leadership is planning to convene for a study session focused on yuan internationalization and stablecoins as early as the end of August. During this meeting, top officials are expected to deliver remarks that will establish the tone for stablecoin development and define the boundaries for its application in business contexts.

Stablecoins, which are typically backed by traditional currencies or assets, have been gaining momentum in global financial markets.

Source: Investing.com