Editor's Note: Just before the implementation of the Stablecoin Ordinance in Hong Kong, China, the "Guidance and Establishment of a U.S. Stablecoin National Innovation Act" was efficiently passed by the U.S. Congress and signed into law by presidential executive order. The bill immediately garnered significant attention from global markets, focusing on the U.S.'s strategic intentions, whether it would accelerate the restructuring of global capital flows, whether it could promote the evolution of international monetary rules and, in turn, influence the transformation of the global financial governance system, and how the underlying infrastructure standards, such as blockchain, would play out in the power dynamics of major powers. To address these complex issues, China Economic Times invited experts in the field to demystify stablecoins and analyze the implications of the U.S. Stablecoin Act for readers. Core Viewpoint: Through the US dollar stablecoin, the United States can bridge the gap between the traditional economy and the crypto world, compete for and consolidate its dominant position in the crypto economy, and establish a new "dollar-stablecoin-cryptoasset" cycle, thereby enhancing US economic strength and inclusiveness. ■ Zhou Qi and Sun Daoyuan Since the beginning of this year, stablecoins have evolved from traditional niche cryptocurrencies into a focal point. By August 2025, the global stablecoin market capitalization will exceed $270 billion, and trading volume will exceed $30 trillion in 2024. Essentially, a stablecoin is a disintermediated payment tool—a new type of payment tool that's independent of traditional banking institutions and not a "currency" in the traditional, narrow sense. For example, within the US, a US dollar stablecoin is similar to cash or PayPal balances, with a key difference: decentralization, meaning it enables payment and settlement without the involvement of third-party intermediaries like banks. Outside the US, it's similar to offshore US dollars in overseas markets, primarily serving as an intermediary in cross-border trade, investment, and financing. In the crypto space, it can be used to buy and sell crypto assets, serving as a bridge connecting the real-world fiat currency value system with the virtual value system of the crypto world.
Functions and Roles of US Dollar Stablecoins
Stablecoins are a type of cryptocurrency pegged to a specific fiat currency or asset. Currently, 99% of global stablecoins are denominated in US dollars, while the US dollar accounts for only 48% of payments in the traditional SWIFT payment system. USDT and USDC are the largest US dollar stablecoins by market capitalization, accounting for 85% of the total. US dollar stablecoins combine the advantages of both cryptocurrencies and traditional fiat currencies, enhancing the digitalization of the US dollar. Firstly, based on technologies such as blockchain and distributed ledgers, stablecoins enable peer-to-peer payments and immediate settlement, significantly shortening cross-border payment chains, improving efficiency, and reducing costs. Furthermore, blockchain-based stablecoins offer transparency and encryption, enabling the implementation of smart contracts. Furthermore, by collateralizing assets such as US dollar cash and short-term US government bonds, US dollar stablecoins can be exchanged and redeemed at a 1:1 ratio with the US dollar, ensuring greater value stability and distinguishing them from the volatile prices of cryptocurrencies like Bitcoin and Ethereum. US dollar stablecoins have expanded the application scenarios and demand for the US dollar, strengthening the global economy's reliance on it. Within the United States, US dollar stablecoins have already seen widespread application in payment settlement, asset management, and other areas. Internationally, as the world's currency, the US dollar enjoys widespread acceptance. As a digital "shadow dollar," US dollar stablecoins have seen even more diverse application scenarios and demand, particularly in cross-border trade payments. Some large international corporations are also experimenting with using US dollar stablecoins as payment instruments. US dollar stablecoins also play an important role in unconventional scenarios, such as hedging financial risks and inflation in emerging market countries and circumventing financial capital controls. Some underground economies (drug trafficking and organized crime) use US dollar stablecoins for large-scale transactions, providing new liquidity for the US dollar. Financial institutions in countries subject to US financial sanctions, such as Russia and Iran, also use US dollar stablecoins to circumvent these sanctions.
The U.S. Stablecoin Act and other related laws in other countries mark that stablecoins have become legal payment tools, with huge potential for future development. Since 2023, the European Union, Singapore, Japan and other countries have successively introduced policies or regulations related to stablecoins, regulating and guiding the development of stablecoins in terms of issuance, supervision, reserve assets, risk management, information disclosure and anti-money laundering. Since January 2025, with Trump's re-election as president, the U.S. regulatory policy on privately issued stablecoins has undergone a major shift. The signing of the U.S. Stablecoin Act has opened the legal door for the subsequent development of stablecoins in the United States, and has tied stablecoins to U.S. national interests, starting to support the development of U.S. dollar stablecoins, in the hope of maintaining the U.S. dollar's position as the internationally dominant reserve currency through stablecoins. The Strategic Intentions of US Stablecoin Legislation Previously, the Biden administration in the US cracked down on the development of cryptocurrencies and supported central bank digital currencies (CBDCs). However, with the inauguration of Trump, the US government began to support the development of stablecoins, but also adopted a relatively cautious approach, defining stablecoins as "payment stablecoins" and emphasizing their payment function. This is intended to address the global trend of de-dollarization, increase demand for US Treasury bonds, and consolidate the US dollar's status as an international reserve currency and payment currency. US dollar stablecoins enhance the dollar's digitalization and functionality, increasing its global application and demand. Therefore, they can offset the ongoing global de-dollarization process and further consolidate the dollar's position as an international currency. At the same time, the U.S. Stablecoin Act stipulates that stablecoin issuers must hold U.S. dollar cash or short-term U.S. Treasury bonds as their primary reserve assets. The development of dollar-denominated stablecoins will inevitably increase demand for U.S. Treasury bonds. According to the U.S. Treasury Borrowing Advisory Committee (TBAC), global stablecoin issuance could reach $2 trillion by the end of 2028, potentially increasing demand for U.S. Treasury bonds by as much as $1.6 trillion, helping to alleviate the massive debt and fiscal deficit pressures facing the U.S. government over the long term. [The text then abruptly shifts topics.] [The text then abruptly shifts topics.] [The text then abruptly shifts topics.] [The text then abruptly shifts topics.] [The text then abruptly shifts topics.] [The text then abruptly shifts topics.] [The text then abruptly shifts topics.] [The text then abruptly shifts topics.] [The text then abruptly shifts topics.] [The text then abruptly shifts topics.] [The text then abruptly shifts topics.] [The text then abruptly shifts topics.] [The text then abruptly shifts topics.] [The text then abruptly shifts topics.] [The text then abruptly shifts topics.] [The text then abruptly shifts topics.] Through the US dollar stablecoin, the US can bridge the gap between the traditional economy and the crypto world, compete for and consolidate its dominant position in the crypto economy, and establish a new "dollar-stablecoin-cryptoasset" cycle. This, in turn, enhances US economic strength and inclusiveness, strengthens the global economy's reliance on the dollar, and generates benefits such as seigniorage. Furthermore, the US Stablecoin Act requires that the US dollar stablecoin be embedded in a US Treasury "digital kill switch." This means that the US dollar stablecoin, like SWIFT, can be used as a political weapon, strengthening US control over the global economic and trade system and threatening the economic security of other countries. Meeting electoral needs. In the 2024 election, Trump reversed his previous opposition and expressed support for Bitcoin and other cryptocurrencies. This not only garnered financial support from the cryptocurrency community, but also garnered the support of more right-wing voters in the US.
Impact on China and Countermeasures
For my country, we should pay close attention to the impact of the US stablecoin strategy on the international monetary system, our domestic monetary sovereignty and financial stability, continue to strengthen the control over US dollar stablecoins and encrypted digital currencies, enrich the scenario applications of domestic digital RMB (CBDC), appropriately encourage legislative supervision and pilot projects in free trade zones and overseas RMB stablecoins, and enhance the digitalization of the RMB to cope with the US dollar's currency competition and prevent the impact of illegal economy, cross-border capital flows, virtual assets, etc. on the domestic financial system and the harm to residents' property safety.
Continue to strengthen the control over US dollar stablecoins and encrypted digital currencies to prevent the impact of disorderly capital flows and financial disintermediation on domestic economic security. Due to the decentralized, borderless, and anonymous nature of blockchain technology, dollar-denominated stablecoins and cryptocurrencies are difficult to incorporate into my country's current financial regulatory framework. Relaxing regulations could disrupt financial order, foster criminal activities such as money laundering, illegal fundraising, and pyramid schemes, trigger systemic risks arising from disorderly cross-border capital flows and financial disintermediation, impacting household wealth, financial institutions, and domestic economic security, and weakening the RMB's monetary sovereignty. Therefore, it is recommended that: first, a consistent approach to dollar-denominated stablecoins and cryptocurrencies be further clarified, prohibiting financial institutions, enterprises, and residents from conducting or participating in related activities. Second, a special campaign be launched domestically to crack down on related gray and illegal activities such as buying, selling, and matchmaking. Overseas virtual currency exchanges are strictly prohibited from providing services to Chinese residents and enterprises via the internet, and risk warnings and financial education should be continuously implemented. Third, appropriate policy measures should be studied and formulated to strengthen international financial coordination and regulatory cooperation, prevent currency substitution risks and financial systemic risks, and safeguard the security and stability of the RMB payment system both domestically and internationally. Continue to expand the digital RMB's retail and cross-border application scenarios within the framework of the Central Bank Digital Currency (CBDC), and establish an ecosystem with banks and internet payment companies. Although the United States has abandoned its CBDC initiative, its compatibility with distributed blockchain technology and the traditional financial system remains noteworthy. my country should continue to develop and improve the application and ecosystem of the digital RMB (e-CNY) within this framework. Therefore, it is recommended that: Steadily advance the research and development and promotion of the digital RMB, applying its technological advantages in offline payment, peer-to-peer payment, and smart contracts to enhance its digital advantages and facilitate payments for China's cross-border trade. Establish ecosystem integration with commercial banks, WeChat, and Alipay, and gradually promote the integration of the digital RMB into traditional banking, e-commerce, and the digital economy. Consider establishing financial products specifically for the digital RMB (such as digital RMB money funds) and enhancing its investment capabilities. Explore CBDC swap agreements with central banks in Southeast Asia, the BRICS, and other countries, and encourage trading partners to use the digital RMB for cross-border payments. Explore the possibility of launching offshore RMB stablecoins issued by licensed financial institutions in the Shanghai Free Trade Zone, Hainan Free Trade Port, Hong Kong, and Macau to counter currency competition from USD stablecoins. Some Chinese merchants have already begun using USD stablecoins for international trade transactions, not only with the United States and Europe, but also with Africa, Asia, and other regions, as they offer a significantly more convenient means of payment. To counter competition from USD stablecoins while balancing the security of the domestic financial system and financial innovation, a compromise approach could be adopted to introduce offshore RMB stablecoins in the Free Trade Zones and Hong Kong and Macau, thereby isolating them from risks in the mainland market. First, improve the policy systems and regulatory requirements for RMB stablecoins in the Free Trade Zones, Hong Kong, and Macau, emphasizing their nature as payment tools, allowing traditional licensed financial institutions to issue offshore RMB stablecoins, enriching the payment and trading ecosystem, and creating appropriate competition with USD stablecoins. Second, establish an intermediary institution in Hong Kong that specializes in cross-border payments and exchange transactions of digital RMB, RMB stablecoins and other currencies, serve the offshore outflow of RMB in China, provide global liquidity support and services for digital RMB, and at the same time take into account the management of offshore RMB exchange rate functions. Third, issue financial assets denominated and traded in offshore RMB stablecoins overseas, expand the scale of offshore RMB bond issuance, provide reserve assets for stablecoin issuers, and enrich the use scenarios and ecology of offshore RMB stablecoins.
(Zhou Qi: Dean and Professor of the Institute of Global Governance and Development, Renmin University of China; Sun Daoyuan: Special Researcher of the Institute of Global Governance and Development, Renmin University of China)
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