China is considering allowing yuan-backed stablecoins for the first time, in what would be a significant reversal of its long-held stance against digital assets, sources familiar with the matter have said.

The State Council, China’s cabinet, is expected to review a roadmap later this month aimed at boosting global usage of the yuan, including through stablecoins, as Beijing seeks to catch up with US-led initiatives in the sector.

The plan would set targets for the currency’s global presence, outline regulatory responsibilities, and include risk-prevention measures.

Senior leaders are also due to hold a study session focused on yuan internationalisation and stablecoins, with officials expected to deliver guidance on their development and boundaries of application.

If approved, the move would mark a stark policy shift. China banned cryptocurrency trading and mining in 2021 over concerns about financial stability, even as it pursued internationalisation of the yuan.

Stablecoins, which are digital tokens pegged to fiat currencies, have become central to global finance for their role in cross-border transactions.

The yuan’s share of global payments fell to 2.88% in June, its lowest in two years, compared with nearly 47% for the US dollar, according to SWIFT.

Beijing views stablecoins as a tool to expand the yuan’s global footprint, though its strict capital controls remain a hurdle.

Regulators, including the People’s Bank of China, are expected to take on implementation duties once the plan is finalised.