China is preparing to enter the global stablecoin race, according to a report from Reuters, as the nation considers the approval and launch of yuan-backed stablecoins — a significant reversal from its strict ban on crypto and related activities since 2021.

The State Council, China’s chief administrative body, will review a roadmap later this month to authorize these stablecoins.

Hong Kong and Shanghai are expected to play starring roles in the rollout. Hong Kong, which recently enacted a Stablecoins Ordinance, will help facilitate offshore issuance, and Shanghai will support domestic trials and set up an international digital yuan center.

This story is an excerpt from the Unchained Daily newsletter.

The initiative’s ultimate goal will be to strengthen the yuan’s role in international finance and counter the growing dominance of U.S. dollar-backed stablecoins.

This policy shift is also aimed at reducing China’s reliance on the U.S. dollar in global payments. Dollar-pegged stablecoins currently make up the vast majority of the world’s $250 billion-plus stablecoin market, while the yuan’s share in global payments is just under 3%.