“I finally understand the conspiracy and conspiracy of stablecoins”

The landscape of currency and payment systems is undergoing a revolutionary change. In the past decade, the field of digital currency has flourished. In the field of virtual currency represented by crypto assets, it is developing from decentralized crypto assets such as Bitcoin to centralized stablecoins, and digital fiat currencies such as central bank digital currencies (CBDCs) are also emerging at home and abroad. These innovations are no longer limited to the small circles of technology and speculation, but have become a hot topic in the fields of economy, regulation and even geopolitics.

This article will dismantle the rise of digital currency layer by layer, explore its actual application scenarios, analyze the collision and integration of digital currency and traditional financial institutions, interpret the logic behind the rapid development of stablecoins, and comprehensively examine its far-reaching impact on the future trend of the US dollar and the global economic landscape.

In 2008, the emergence of Bitcoin opened a new chapter in finance. With the help of distributed ledger technology, it realizes peer-to-peer transactions without the need for intermediaries such as banks, impacting the traditional financial system. Today, digital currency has evolved into a large and complex ecosystem: On the one hand, the market for virtual currencies issued by individuals or enterprises is very active. There are not only relatively "well-known" decentralized encrypted assets such as Bitcoin and Ethereum, but also so-called "Dogecoin" and "Trump Coin" and other topic-hyped vehicles, and centralized trading media such as stablecoins (Editor's Note: From a technical point of view, digital assets issued based on cryptography and blockchain technology such as Bitcoin and Ethereum are generally referred to as cryptocurrencies. They do not have a legal status under many regulatory frameworks and are often classified as "virtual currencies/assets"); on the other hand, legal digital currencies issued by central banks are also developing rapidly, such as the digital RMB and digital euro prototypes. Their issuance and circulation are supervised by the central bank, centrally managed, and exchanged at the same value as physical currencies.

Bitcoin, the earliest cryptocurrency, may be the most talked-about among many digital currencies, but its price fluctuates greatly. For example, in just one year, the price rose from $785 at the end of 2016 to over $20,000 at the end of 2017, and then fell to $3,242 at the end of 2018. Such drastic fluctuations make it difficult to use as a daily payment currency, and it is more often used as an investment target. Although some merchants and platforms accept Bitcoin payments, they will eventually be converted into legal tender for settlement.

Ethereum, a blockchain technology platform established in 2014, launched Ether, which gave digital currencies "smart" features, giving rise to new applications such as decentralized finance and NFT, helping companies achieve automated settlement, online loans and other businesses. Today, Ethereum is the world's second largest cryptocurrency after Bitcoin, with a total market value of more than $460 billion.

To cope with price fluctuations in digital currencies, stablecoins achieve value stability by anchoring legal tender or commodity assets: one is represented by the so-called "Tether" and "Dollar Coin", with a market size of over $250 billion, backed by assets such as the U.S. dollar and U.S. short-term Treasury bonds, and can be exchanged at "any time" at a 1:1 or other ratio; the other is an algorithmic stablecoin that attempts to adjust supply and demand through on-chain algorithms. Today, stablecoins have become a core tool for cross-border payments, remittances, and liquidity supply in the crypto asset market, with global daily trading volumes often exceeding $100 billion.

In recent years, central bank digital currencies (CBDCs) represent the entry of official forces. For example, my country's "digital RMB" has entered the stage of popularization and promotion; some scholars define it as "electronic base currency (M0)", which retains the attributes of legal currency but uses digital infrastructure as a carrier. In addition, there is also the idea in the theoretical community that international institutions will issue "World Cryptocurrency (WCC)" as a neutral medium for global reserves, which has also triggered discussions in the collision of de-dollarization pressure and digital innovation.

From the perspective of commercial value, the advantages of digital currency are obvious: faster settlement efficiency, lower cross-border transaction costs, programmable features that support automated processes, and financial inclusion for the unbanked. In the real economy, its application has penetrated into many fields: in the mature remittance channels in Southeast Asia and Latin America, stablecoins are subverting the traditional agency banking system with near-real-time settlement and low fees; in trade finance and supply chain scenarios, smart contracts can automatically trigger invoice issuance and payment after delivery confirmation, simplifying the letter of credit and supply chain financing process; some companies (such as MicroStrategy) use Bitcoin as a reserve asset to try to hedge the risk of legal currency depreciation.

But challenges cannot be ignored: price fluctuations, technical scalability bottlenecks, network security risks and uncertainty in legal status. Even though some companies and even the Trump administration have used Bitcoin as a reserve asset, there are constant disputes: decentralized finance has high returns, but there are contract and counterparty risks; the tokenization of physical assets has improved liquidity, but supervision is still imperfect.

In recent years, from Europe to the United States, from China to other emerging markets, as countries steadily promote the application and regulatory framework of various types of digital currencies, this currency revolution triggered by technology has entered a critical stage. Compared with the huge global financial system, digital currency is still in its early stages of development. For a long time, the US dollar has become the world's main currency thanks to its good liquidity, while a large number of digital currencies are still far less than the US dollar in terms of scale and stability; however, as digital currencies continue to gain widespread recognition, varieties with stable value and enhanced liquidity, combined with a gradually improved regulatory framework, may truly challenge the status of traditional currencies.

Between "native" digital currency companies and traditional financial institutions, cooperation and game have been alternating. After all, at the critical juncture from the digital ecosystem to the "real world", both fiat-denominated risk financing and digital currency exchange completed through bank accounts are still subject to the cautious attitude of traditional institutions towards regulatory uncertainty and potential risks.

This tension is particularly prominent in iconic failure cases. The Libra (later renamed Diem) plan led by social media giant Facebook in 2019 is a typical example of conflict between technology giants and the field of stablecoins. This alliance composed of payment giants such as Visa and Mastercard initially attempted to launch a global asset-backed stablecoin anchored to a basket of currencies, but immediately triggered a strong backlash from regulators. Concerns about monetary sovereignty, financial stability, privacy protection and illegal financial activities by US lawmakers and regulators forced the founding members to withdraw one after another under political pressure. Even though the project was later adjusted to a single-currency stablecoin, it was ultimately aborted due to the governance dispute over "private institutions controlling the right to issue currency."

Some analysts believe that the failure of Libra is a typical case of "traditional financial institutions and regulators resisting the cession of influence on currency issuance." When the feasibility of technology encounters the dual test of sovereign authority and public trust, the defects of the governance framework will eventually backfire on innovation itself. Similarly, Meta (formerly Facebook)'s subsequent attempts and other technology giants' digital currency projects are also facing strict scrutiny, while traditional European and American financial companies still have a huge say in digital currency regulation.

However, apart from the controversy, the successful paradigm of co-evolution has quietly taken shape:

• Crypto asset custody and institutional services: Large banks such as Fidelity and New York Mellon have provided cryptocurrency custody services to institutional clients, incorporating digital asset custody into the traditional risk framework, and connecting traditional custody standards through segregated accounts, insurance mechanisms and compliance processes;

• Digital currency integration of payment networks: PayPal, Visa, MasterCard and other institutions have supported the payment or settlement of specific cryptocurrencies, partially accelerating clearing and reducing foreign exchange costs through stablecoin channels, demonstrating the acceptance of digital currency flows by traditional payment networks under a compliance framework;

Overall, although distributed ledger technology (DLT) has weakened the reliance on traditional financial intermediaries, in reality, blockchain companies still need to obtain legal currency liquidity and meet regulatory requirements through compliant partners. From Coinbase, the first licensed Bitcoin exchange in the United States, establishing banking partnerships through a strict compliance framework, to JPMorgan Chase launching JPM Coin for inter-institutional instant settlement, to Visa piloting USDC stablecoin settlement to optimize cross-border payment efficiency, many real-life "successful" cases have shown that digital currency innovation is no longer pursuing complete disintermediation, and when technology providers and traditional institutions work together to design solutions, they can give birth to a financial paradigm that is both innovative and stable. This "cooperation in competition" is reshaping the underlying logic of financial infrastructure, and the improvement of regulatory mechanisms and the gradual unification of global standards may accelerate the maturity and evolution of the digital currency ecosystem.

In the past few years, stablecoins, a special type of digital currency, have achieved relative price stability by being linked to legal tender or other assets, and have leapt from a marginal role in the crypto market to a core presence in the fields of trading, settlement and payment. Since June, the average daily trading volume of US dollar stablecoins has exceeded US$100 billion, significantly exceeding the trading volume of Bitcoin and Ethereum. The current total market value of stablecoins has exceeded US$250 billion, an increase of more than 250 times compared to 2019. It has not only changed the way digital value is exchanged, but also spawned a new profit model. At the same time, under the influence of political and business games and geopolitics, it has also promoted the rapid evolution of the regulatory framework.

(I) Operational model and market structure of stablecoins

The booming stablecoin industry is backed by a clear logic of operation and profitability. Most of the leading issuers invest their reserve funds in short-term U.S. Treasury bonds, money market funds and other highly liquid assets. Taking Tether, the issuer of Tether, as an example, its first-half 2024 financial report shows that its profit of $5.2 billion mainly comes from reserve income, with its holdings of U.S. Treasury bonds alone exceeding $97 billion, and monthly interest income of about $400 million. Similarly, Circle, the issuer of USDC, gets about 98% of its revenue from reserve interest, and its revenue of $1.7 billion in 2024 has increased significantly, largely due to the rise in short-term U.S. Treasury yields.

The profit model of these issuers is not complicated: each stablecoin issued corresponds to a unit of equivalent fiat currency reserves. When stablecoins circulate in the digital market, the issuer will invest the reserve funds in financial instruments that can generate income, and make a profit by earning the difference between income and operating costs. This kind of income arbitrage constitutes the main source of profit for the leading stablecoin issuers.

In addition to reserve interest, stablecoin issuers have a variety of profit channels. For example, charging fees for large-scale coin minting and redemption operations of institutional users, charging fees for custodial services provided to institutional clients, or providing technical support for the issuance of stablecoins to partner companies. Some issuers also actively participate in investment activities. For example, Tether is involved in cryptocurrency lending and large-scale investment projects to obtain a lot of additional income. Circle promotes the market of USDC by sharing reserve income with trading platforms such as Coinbase. In 2024, the distribution fee paid to Coinbase exceeded US$900 million. Emerging stablecoins such as PayPal's PYUSD also use the "idle period of funds" to earn income, while attracting users with high interest rates (such as the 3.7% annualized return launched in 2025).

The market position of stablecoins is often determined by the alliance network behind them. USDT has the largest cooperation map: Bitfinex, the "largest" offshore cryptocurrency exchange, is the main trading platform. Cantor Fitzgerald, which is headed by the current US Secretary of Commerce Rutnick, is responsible for the custody and management of reserve assets, and also cooperates with investment institutions to carry out major projects such as Bitcoin acquisition. This in-depth cooperation has allowed USDT to occupy the majority of the market with a scale of 118 billion US dollars, and even deeply integrated into various trading platforms and decentralized financial systems. Cantor Fitzgerald's professional management of more than 80% of its treasury assets, coupled with cooperation with capital such as SoftBank, has long made Tether's influence exceed the niche digital currency circle.

The second largest stablecoin USDC has taken a compliant alliance route. Jointly initiated by Circle and Coinbase, the first licensed Bitcoin exchange in the United States (Circle later operated independently), USDC has quickly penetrated into trading and payment scenarios with a market value of 60 billion US dollars and an annual growth rate of 78%. Circle's strategy of actively complying with the EU MiCA regulatory requirements and docking with the US stablecoin legislation has won the trust of institutions. Cooperation with mainstream institutions such as Binance, the world's largest cryptocurrency exchange, and Visa, a credit card giant, has gradually integrated USDC into the traditional financial system, and regular audits and transparent operations have also widened the gap between it and other competing products. On the evening of June 5, Circle was officially listed on the New York Stock Exchange in the United States, becoming the "first stablecoin stock". The first-day increase exceeded 168%, far exceeding expectations; and it also promoted a number of digital currency companies to launch IPO plans.

In addition to the top players, new players have entered the market with different models. For example, USD1 was launched by a company under the Trump family, in conjunction with Binance, the world's largest cryptocurrency exchange, and MGX, a UAE fund, in an attempt to open up the market with political influence and platform resources; however, due to the controversy and regulatory review associated with the project, users and the public have limited acceptance, and the prospects are still unclear. USDB has taken a different approach, led by Stripe, another major payment giant in Europe and the United States, and adopts a "revenue sharing" model: users and developers take the lion's share, and the issuer only charges a small service fee, trying to attract financial technology companies to adopt a more open model.

Traditional financial institutions are also not idle. JPMorgan Chase, Bank of America and others are working together to develop regulated digital dollar stablecoins, intending to rely on existing interbank payment systems (such as Zelle, the "American version of Alipay") to provide safer digital payment services. The current goal of these bank-led projects may not be to compete with crypto exchanges, but to hold on to the mainstream payment market in the era of financial technology, and to retain businesses and consumers at a lower cost and faster speed.

As the Hong Kong Stablecoin Ordinance is approaching its entry into force on August 1 this year, leading domestic companies are deploying in the field of stablecoins. Ant Digits, a subsidiary of Ant Group, has initiated the application for a Hong Kong stablecoin license, and has communicated with regulators for multiple rounds and completed the sandbox pilot, listing Hong Kong as its global headquarters; Ant International also plans to apply for a Hong Kong stablecoin license to accelerate global treasury management investment and cooperation, and invest in innovative applications of artificial intelligence, blockchain and stablecoins. The stablecoin of JD.com's JD Coin Chain Technology has entered the second phase of sandbox testing, with test scenarios covering cross-border payments, investment transactions, retail payments, etc., aiming to significantly reduce the exchange costs of global companies.

(II) Driving force behind the rapid development of stablecoins

The reason why stablecoins can rise rapidly is that they accurately meet the multiple needs of the market and are the "greatest common divisor" of multiple interest groups such as technology capital, multinational capital and traditional financial institutions.

In cryptocurrency transactions, it plays the role of a "stabilizer". Investors can freely convert between volatile crypto assets and relatively stable fiat currencies without frequently entering and exiting bank accounts. Today, lending, financial management, derivatives trading and other links in the crypto field all rely on stablecoin pricing and settlement to avoid the risk of price fluctuations of crypto assets, which further amplifies market demand. In addition, cross-border payments have always been a pain point for traditional finance, with high fees and slow arrival. The emergence of the US dollar stablecoin, known as the "shadow dollar", has continued to penetrate areas with weak financial infrastructure through rapid and low-cost circulation around the world. Some analysts even believe that the monetary mechanisms of many African countries are about to be "stablecoinized". The macroeconomic environment has also played a driving role. In the past few years of high interest rates, stablecoin issuers have invested their reserve funds in higher-yielding assets such as government bonds, which not only made profits, but also attracted users and partners through interest subsidies, and established channels to deliver digital technology development benefits to traditional financial giants such as banks. At the same time, the maturity of blockchain technology, such as the improvement of cross-chain interoperability, and the gradual clarification of regulatory policies have cleared the way for the large-scale application of stablecoins. At present, the development of stablecoins is always accompanied by a deep game between politics and business. In the United States, the discussion of stablecoin-related legislation (such as the GENIUS Act and the STABLE Act) is the result of a fierce battle between issuers, financial institutions and regulators. The Trump family actively promoted the USD1 project and also helped the current US government's regulatory reforms; Tether tried to improve its compliance and influence through the alliance to prevent the risk of the US's "long-arm jurisdiction" over offshore transactions; Circle set a benchmark for the development of compliant stablecoins by going public and actively embracing regulation; the joining of the banking alliance is intended to prevent unregulated private stablecoins and maintain the stability of the existing monetary system.

Therefore, the future of stablecoins depends to a large extent on the direction of regulatory policies. The legislative process in the United States will directly determine whether the issuance of US dollar stablecoins will usher in prosperity or be forced to turn to overseas. After the implementation of the EU's MiCA Act, strict standards for reserve transparency and capital requirements have been proposed, which will benefit compliant companies such as Circle and squeeze the living space of non-compliant projects. Hong Kong, China, Singapore and other regions are also actively exploring regulatory innovation, trying to create a highland for the development of digital finance under the premise of controllable risks. The differences in regulatory policies in different regions not only affect the layout and location of stablecoin companies, but also pose challenges to the interoperability of cross-border transactions. How to establish a unified global regulatory standard has become an important issue facing the industry.

In general, stablecoins are continuously integrating into traditional finance and trade. Companies can use stablecoins for international trade settlement and reduce exchange rate risks; asset tokenization may also use stablecoins to achieve more efficient transactions. The development of central bank digital currencies (CBDCs) in Europe and Asia may prompt stablecoins to establish links with official digital currencies and form a new financial ecology. At the same time, the risks of stablecoins cannot be ignored. Problems such as opaque reserve assets, regulatory arbitrage, and intensified market competition are always threatening the stability of the industry. The previous collapse of algorithmic stablecoins has sounded the alarm. In addition, geopolitical conflicts and cybersecurity risks have also added uncertainty to the development of stablecoins.

In recent years, the field of digital currency has developed rapidly, and various digital currency companies have sprung up like mushrooms after rain. Governments and international organizations are also working hard to formulate corresponding rules and frameworks. All kinds of changes are profoundly affecting all aspects of the global economy, especially the US economy and the pattern of international trade and US dollar hegemony.

(I) Impact on the US Economy

In the United States, stablecoins denominated in US dollars will play an increasingly important role. A lot of analysis shows that the current Trump administration is trying to build a stablecoin ecosystem supported by U.S. Treasury bonds, forming a "chain U.S. Treasury cycle" to attract stablecoin issuers to become important holders of U.S. Treasury bonds, thereby increasing the demand for U.S. Treasury bonds, reducing government borrowing costs, and alleviating crises such as high U.S. Treasury bond scale and shaken confidence of holders. At the same time, the inclusion of stablecoins in the anti-money laundering and financial regulatory system, the extension of the long-arm jurisdiction, and the restriction of foreign entities from issuing stablecoins in the United States are intended to ensure that this process is within controllable range.

On the technical level, if the U.S. dollar stablecoin can be reasonably regulated and widely adopted, it will not only improve the efficiency of the financial market, but also provide opportunities for U.S. financial institutions to open up new business areas. At the same time, the development of stablecoins will also help promote the modernization of the U.S. payment system. In addition, the introduction of relevant rules on interest payments, offshore transactions, etc. is also expected to further promote the market acceptance of related financial products.

Therefore, the United States's measures in digital currency regulation and policy are crucial. By developing a regulatory framework, such as the "GENIUS Act", the United States can set global standards for the issuance and regulation of stablecoins to enhance investors' and institutions' confidence in digital assets backed by the US dollar. Currently, the Trump administration is trying to use a series of actions to allow financial institutions and innovative companies to take advantage of regulatory and policy advantages to attract global funds and talents to the United States, further consolidating the United States' leadership in the global financial field.

(II) Impact on international trade and US dollar hegemony

The widespread use of (offshore) US dollar stablecoins such as USDT in international trade has actually further extended the hegemony of the US dollar to the field of digital transactions. Since most stablecoins are issued and reserved based on the US dollar, the dominant position of the US dollar in international trade settlement has been further consolidated. In the global digital trade ecosystem, the US dollar is still the core transaction currency. The United States can indirectly affect the capital flow and settlement system of global trade through the supervision and control of stablecoins.

At present, decentralized cryptocurrencies such as Bitcoin account for a relatively small proportion of global foreign exchange reserves. Their market value is insignificant compared with the trillion-dollar global US dollar foreign exchange reserves. It is unlikely to pose a substantial threat to the US dollar hegemony in the short term. However, in the long run, if decentralized cryptocurrencies such as Bitcoin are more widely used in cross-border transactions or as a means of storing value, it may reduce dependence on the US dollar to a certain extent.

In some emerging market countries, digital currencies, especially stablecoins linked to other assets, are becoming an alternative medium of exchange. However, this trend also faces many challenges: on the one hand, the digital currency infrastructure construction in emerging market countries is relatively weak, and there are problems in network coverage, technical security and other aspects, which limits the widespread application of digital currency. On the other hand, central banks and regulators of various countries are generally cautious about unregulated digital currencies, fearing that they will have an impact on their own financial stability and monetary policy implementation.

Against the backdrop of increasingly fierce global geopolitical competition, some major countries are actively promoting the development of their own central bank digital currencies to reduce their dependence on the hegemony of the US dollar and to counter it. my country's exploration of digital RMB in the field of cross-border payments and the construction of related cross-border payment platforms provide a new payment option for international trade, thereby diverting the share of the US dollar in cross-border trade settlement to a certain extent.

The current global digital currency regulatory landscape presents a diversified and differentiated trend. Based on multiple considerations such as financial stability, technological innovation and geopolitical competition, countries have formed a spectrum of strategies ranging from total prohibition to active embrace. The core driving force of this evolution includes both the practical need to prevent systemic risks and the competition for monetary sovereignty and digital economic dominance.

(I) The United States: Strategic integration under a decentralized framework

As the world's largest digital currency market, the United States adopts a decentralized regulatory model between the federal government and the states. In recent years, legislation has been passed to accelerate the construction of a unified framework. The advancement of the 2025 "Genius Act" is a key symbol. The bill aims to set a 1:1 reserve requirement, independent audit and consumer priority redemption rights for the issuance of stablecoins, and exclude payment stablecoins from the scope of securities and commodities and include them in a quasi-bank regulatory system. This move not only responds to the risks exposed by the collapse of Terra/Luna, but also attempts to consolidate the dominant position of the US dollar in cross-border payments by regulating the issuance of stablecoins.

At the same time, the Federal Reserve revoked a number of restrictions on banks' participation in crypto business in April 2025, allowing them to carry out related activities through regular regulatory procedures, sending a signal of support for financial technology. In addition, the US government, through the Strategic Bitcoin Reserve Program, has included the confiscated 200,000 bitcoins into national assets, attempting to form a closed loop of "US dollar-stablecoin-crypto market" and further strengthen the pricing power of the US dollar in the field of digital assets.

(II) EU: Legislation-first risk classification paradigm

The EU established the world's first comprehensive regulatory framework through the Crypto-Asset Market Regulation Act (MiCA), which divides crypto assets into payment-type, securities-type and other categories for differentiated regulation. For stablecoins, MiCA requires issuers to hold sufficient reserve assets and fulfill strict disclosure obligations, while setting minimum capital and anti-money laundering compliance thresholds for service providers.

In addition, the EU's research and development of the digital euro has progressed rapidly. The design concept of its two-tier operating structure (central bank and commercial banks collaborate) aims to take into account market innovation while safeguarding monetary sovereignty, attempting to become a benchmark for sovereign digital currency design.

(III) Asia: The dual logic of technological sovereignty and financial security

China adopts a strategy of adapting measures to local conditions and opening up at the forefront. In the mainland, the priority is to ensure financial security and order stability, so the dual-track strategy of "banning private cryptocurrencies + promoting central bank digital currencies" is adopted. Through documents such as the "Notice on Preventing the Risk of Speculation in Virtual Currency Transactions", my country has clearly banned cryptocurrency transactions and financing, and has made every effort to promote the pilot of the digital RMB. It has currently covered scenarios such as retail payments and cross-border settlements (such as the mBridge project), and explored programmable features to strengthen anti-money laundering functions. This choice is based on both the consideration of preventing financial risks and the reconstruction of the cross-border payment system under the "Belt and Road" initiative. At the same time, as the forefront and pilot base of financial innovation in Asia, Hong Kong, China is highly integrated with the global financial market. Against this backdrop, Hong Kong launched a licensing system for virtual asset trading platforms in 2024 and launched a Bitcoin spot ETF. In May 2025, the Stablecoin Bill was passed, requiring issuers to pay HK$25 million in capital and undergo continuous audits to attract global Web 3.0 resources.

Japan and Singapore chose to balance openness and regulation: Japan implemented licensing management for crypto exchanges in accordance with the Payment Services Act and included stablecoins in its regulation; Singapore established a clear licensing system through the Payment Services Act, allowing qualified institutions to issue stablecoins, and at the same time conducted cross-border settlement trials of central bank digital currencies with multiple countries.

(IV) Emerging Markets: The Struggle between Financial Inclusion and Monetary Sovereignty

In Latin America, Africa and other regions where traditional financial services are weak, digital currencies are seen as a tool to address financial exclusion and cross-border remittance costs. Nigeria's eNaira, launched in 2021, covers the unbanked through mobile wallets, reducing cross-border remittance fees by 70%; Brazil plans to launch a central bank digital currency in 2022 to improve the efficiency of the payment system and cope with the pressure of the real depreciation. However, some countries have adopted a conservative strategy due to insufficient regulatory capacity. For example, India once banned cryptocurrency transactions and later turned to pilot central bank digital currencies. This differentiation reflects the difficult trade-off between technology dividends and the loss of monetary sovereignty in emerging economies - the "digital dollarization" trend of stablecoins may increase dependence on the US dollar, while independently developed central bank digital currencies need to cope with both technical and institutional challenges.

(V) Global coordination: consensus and differences coexist

International organizations are promoting the convergence of regulatory standards. The Financial Stability Board (FSB) proposed the principle of "same business, same risk, same regulation", requiring the issuance of stablecoins to follow strict reserve and liquidity management standards; the Financial Action Task Force on Money Laundering (FATF) updated the virtual asset regulatory guidelines to strengthen travel rules and beneficial ownership transparency. However, differences in interests between China, the United States, Europe and other parties have led to fragmented implementation.

Multiple forces are also driving the transformation of the global regulatory paradigm. First, the need for financial stability is the direct trigger: the chain reaction caused by the collapse of TerraUSD in 2022 exposed the vulnerability of algorithmic stablecoins and prompted countries to strengthen reserve requirements and investor protection. Secondly, geopolitical competition reshapes the power of rule-making. The United States consolidates the hegemony of the US dollar through stablecoins and Bitcoin reserves, while my country expands the international payment network with digital RMB, forming a dual game of "technical route plus dominant currency". Finally, the pressure of anti-money laundering and anti-terrorist financing continues to increase. FATF data shows that the scale of virtual currency-related crimes will increase by 32% year-on-year in 2024, forcing countries to strengthen on-chain transaction monitoring and international intelligence sharing.

Today, the digital currency industry is at a critical turning point from the edge to the mainstream, and the regulatory landscape will also show the characteristics of "bottom line unification and regional differentiation". The minimum standards of institutions such as FATF and FSB are gradually implemented, but there are still differences among countries in market access, technical routes, etc. In general, stablecoins may become the focus of competition in the next stage. The promotion of the "Genius Act" in the United States and the implementation of the "Stablecoin Ordinance" in Hong Kong, China, indicate that the global stablecoin market will evolve towards compliance and institutionalization.

Looking forward to 2030 and beyond, there are four possible scenarios for the development of digital currency and the US dollar, which will profoundly affect the global financial landscape.

Scenario 1: Strengthening of the dominance of the US dollar. If the United States builds a digital dollar system compatible with private stablecoins, it will promote its popularity in the payment field at home and abroad. The US dollar stablecoin regulated by the "Genius Act" will become the main tool for online transaction settlement. The Federal Reserve has also issued a retail central bank digital currency to connect traditional banks with digital finance. After the global cross-border payment system is integrated into the relevant channels, the hegemony of the US dollar will be further consolidated, and decentralized cryptocurrencies such as Bitcoin will find it difficult to shake its core position.

Scenario 2: Multipolar digital currency ecology. In the future, multiple digital currencies such as the US dollar stablecoin, the digital RMB used in the region, and the euro stablecoin under EU supervision will coexist. In order to meet the needs of cross-border wholesale settlement, synthetic-dominated digital currencies may emerge, which will weaken the dominance of the US dollar to a certain extent. The reserve assets of various countries tend to be diversified, and digital assets are included. Enterprises and individuals can choose payment channels according to efficiency, cost and supervision.

Scenario 3: Fragmentation of the digital currency landscape. Regulatory differences and geopolitical conflicts hinder the interoperability of digital currencies. Different regions use incompatible systems, resulting in the split of payment networks. Private stablecoins develop in some regions and are restricted in other regions. Cross-border trade and finance face the complex situation of multiple digital currency payments, which increases the difficulty of compliance. The role of the US dollar in some areas is replaced by regional digital currencies, but market fragmentation restricts the improvement of economic efficiency. Scenario 4: Radical changes in decentralized currencies. Although the possibility is low, if decentralized cryptocurrencies achieve stability and recognition through algorithmic improvements, perfect management and combination with real assets, they may become reliable trading and value storage tools. Global participants may bypass sovereign currencies and use them for trade and reserves. However, this requires overcoming difficulties such as price fluctuations and expansion of transaction scale, and regulatory cooperation. Due to technical, legal and political obstacles, it is difficult to achieve in the short and medium term. Overall, the future direction of digital currency is affected by many factors. Supervision needs to balance innovation and stability and cultivate reliable stablecoins; technically, blockchain systems must make breakthroughs in transaction scale, compatibility, privacy and security; cross-border cooperation needs to build an interoperable network through protocols, standards and mutual trust mechanisms; geopolitical situations affect the promotion of digital currencies; the acceptance of users, institutions and enterprises, economic crises and public awareness are also crucial to its development.