China and the United States set their sights on the crypto industry: Could Bitcoin become a key battlefield?

Written by: Wu Tianyi, DeThings

On January 23, US President Donald Trump signed an executive order to promote the development of cryptocurrency in the United States and work to establish a national digital asset reserve. David Sacks, a venture capitalist known as the "Crypto Tsar", signed the order with Trump.

The order states: "The digital asset industry plays a vital role in American innovation and economic development and our country's international leadership."

According to CoinDesk, China is planning to replace the US dollar. China and Russia have reduced their holdings of US Treasuries worth billions of dollars while increasing their gold reserves. China, Iran and Russia are actively building parallel cross-border economic systems, bringing not only their neighbors into their orbit, but also allies with whom they have a lot of trade.

At the same time, the People's Bank of China and five other departments jointly issued the "Opinions on Piloting the Docking of International High Standards in the Financial Sector in the Conditional Free Trade Pilot Zone (Hong Kong) to Promote Institutional Opening". The document mentioned "supporting mainland residents in the Guangdong-Hong Kong-Macao Greater Bay Area to purchase qualified investment products sold by Hong Kong and Macao financial institutions through Hong Kong and Macao financial institutions, and expanding the scope of participating institutions and the scope of qualified investment products". This policy may provide an opportunity for the potential development direction of the crypto asset industry.

Bitcoin becomes a key battlefield?

Much of the executive order signed by Trump focuses on establishing cryptocurrency technology and rules and its development in the United States. One of the key contents is the establishment of a working group to consider the establishment of a national digital asset reserve, "which may come from cryptocurrencies legally seized by the federal government through law enforcement actions."

The order also outlines other key priorities for the digital asset industry, including protecting individuals and private enterprises using blockchain networks from "persecution." The document details certain protections for developers and miners, noting that they should be able to freely "develop and deploy software" and "participate in mining and verification," a nod to the technicians who protect the Bitcoin network.

The president also pledged to defend the rights of those who choose to self-custody digital assets. This means that they do not rely on centralized entities such as Coinbase to custody tokens, but instead use personal crypto wallets, which are sometimes not regulated by the IRS. 

The order emphasizes promoting the sovereignty of the dollar by supporting the development of globally legal, dollar-backed stablecoins.

CoinDesk said that U.S. policymakers are too narrowly focused on macroeconomic tools such as sanctions and promoting the dollar as a reserve currency. Today, the real battle is taking place in smartphones and global currency markets. For example, more than half of Japanese businesses accept Alipay, while more than a third accept WeChat Pay.

China continues to pay attention to the United States' relevant Bitcoin policies. Wang Yongli, former vice president of the Bank of China, wrote in the article "A Rational View of Trump's New Bitcoin Policy" in the 1st issue of "China Foreign Exchange" in 2025, in which he mentioned that Bitcoin highly imitates gold at the "currency" level, and its total amount and phased increase are completely set by the system, which is more stringent than gold (it is actually unclear how much gold reserves there are). The amount that can be used for exchange transactions is more limited, and it cannot grow with the growth of the value of tradable wealth at all, which does not meet the essential requirements of currency. With Trump's victory in the US presidential election, the new Bitcoin policy he proposed has attracted widespread attention and heated discussions. We need to calm down, look at it rationally and objectively, and avoid making subversive mistakes.

Previously, Zhou Xiaochuan, vice chairman of the Boao Forum for Asia and former governor of the People's Bank of China, mentioned at the "Boao Forum for Asia New Year Outlook 2025" event that the world economic recovery in 2025 is full of variables, and the industrial chain is forced to reshape. Global public debt is about to exceed 100 trillion US dollars, which will increase the external financing costs and exchange rate depreciation pressure of emerging markets and developing countries, and debt will bring challenges to the fiscal sustainability of developed countries. We need to be vigilant about the impact of digital crypto assets on global financial stability and financial security.

Regarding the Opinions on Piloting the International High Standards in the Financial Sector to Promote Institutional Opening in the Conditional Free Trade Pilot Zone (Hong Kong) jointly issued by the People's Bank of China and other five departments, Liu Honglin, a lawyer at Mankiw Law Firm, said that with the Hong Kong SAR government's active exploration of virtual asset supervision, such as the launch of virtual asset ETFs, it is worth looking forward to whether these products can be included in the cross-border wealth management in the future.

Combined with policy terms, if Hong Kong's crypto asset products can provide investment channels for mainland investors through wealth management, it will not only enrich the asset allocation options of mainland residents, but also become an important tool for promoting the internationalization of the RMB. Once the scope of cross-border wealth management is further expanded, virtual asset ETFs or on-chain bonds may take the lead in piloting, opening the door to the financialization of the blockchain industry.

Different attitudes towards CBDC

It is worth mentioning that Trump's executive order also prohibits the "establishment, issuance, circulation and use" of the US central bank digital currency (CBDC), and requires the working group to study the possibility of establishing and maintaining a national cryptocurrency reserve and a stable currency regulatory framework.

Ordering federal agencies to stop any potential CBDC development was one of Trump's campaign promises to the crypto industry during his presidential campaign.

Geoff Kendrick, global head of digital asset research at Standard Chartered Bank, told Cointelegraph: “CBDCs are dead in the U.S. during the Trump administration. Instead, they are going the private stablecoin route, and there is nothing the Fed can do about it.” Administration spokesman Brian Hughes told Reuters that “the Trump administration will provide a seat at the table for those who are committed to defending the rights of the American people, putting America first, and ensuring that working people’s tax dollars are used in the most effective way.”

Such rhetoric fits with the general Republican skepticism of government involvement in the financial industry and a desire for broad deregulation of the sector. It is no surprise, then, that CBDCs are a target, as they have already been the subject of public privacy concerns.

While some CBDC developers, such as the European Central Bank, have said privacy is a top priority, few in the public appear to believe this, hampering CBDC efforts. According to CBDC Tracker, of the 169 CBDC projects currently underway, only four have been launched.

On the contrary, as of July 24, the e-RMB application has attracted 1.8 billion personal wallet users, and the cumulative transaction volume in the pilot area has reached 7.3 trillion yuan (1 trillion US dollars). The mBridge project entered the minimum viable product (MVP) stage in mid-2024. The project aims to explore a multi-central bank digital currency (CBDC) platform shared by participating central banks and commercial banks, which is built on distributed ledger technology (DLT) to achieve instant cross-border payments and settlements.

The mBridge project is the result of extensive cooperation between the Innovation Center of the Bank for International Settlements, the Bank of Thailand, the Central Bank of the United Arab Emirates, the Digital Currency Research Institute of the People's Bank of China, and the Hong Kong Monetary Authority since 2021. The Saudi Central Bank joined in 2024.

In September 2024, Reuters said that a total of 134 countries (accounting for 98% of the global economy) are currently exploring digital versions of their national currencies, nearly half of which are in the late stages, while pioneering countries such as China, the Bahamas and Nigeria have begun to see a rebound in usage. Among them, the use of electronic RMB has increased nearly fourfold to 7 trillion yuan (987 billion US dollars).

A study released by the Atlantic Council think tank on Tuesday showed that all G20 countries are currently studying central bank digital currencies (CBDCs), and a total of 44 countries are piloting them.

Dong Zhiyong, a scholar at Peking University, believes that the incentive mechanism of payment institutions is a challenge. Merchants do not need to pay fees to accept digital RMB. Although this is a good thing for merchants, if it is not widely used, merchants will face additional administrative burdens, and they will not be able to obtain commissions from transactions, and lack the motivation to join. Therefore, he suggested establishing a reasonable charging mechanism and exploring value-added services with payment institutions.

In addition, he suggested creating an ecosystem for industrial and commercial use cases, as businesses have begun using e-RMB when processing large transactions despite low consumer acceptance. Currently, the administrative burden on retailers is being gradually resolved, and a new "smart account splitting" application is being piloted to simplify accounting and reconciliation processes.