Stablecoin Showdown: How China And The US Are Battling For Global Financial Power

Stablecoins have emerged as the newest enviornment within the rising monetary rivalry between america and China. In contrast to unstable cryptocurrencies comparable to Bitcoin, stablecoins keep a hard and fast worth by pegging themselves to an underlying asset — usually the U.S. greenback or the Chinese language yuan. 

As regulators in Hong Kong and Washington transfer to implement new guidelines, each powers are signaling their intent to form the subsequent period of digital cash. The competitors is not only about expertise; it’s about who controls the way forward for international finance.

Hong Kong’s Stablecoin Push

In Could 2025, Hong Kong handed the Stablecoins Invoice, creating one of many world’s first complete frameworks for stablecoins pegged to conventional currencies. The transfer provides one other dimension to Beijing’s long-term efforts to cut back reliance on the U.S. greenback. Alongside initiatives such because the Cross-Border Interbank Cost System (CIPS), BRICS Pay, and the digital yuan, Hong Kong’s stablecoin ecosystem might assist China increase worldwide commerce exterior of Washington’s attain.

The road is kind of clear right here: Hong Kong can pursue government-backed stablecoin innovation, however the mainland stays adamant on limiting non-public cryptocurrencies. The Chinese language authorities views its CBDC (digital renminbi) far more favorably than any decentralized asset. This fashion, China has the chance to experiment with digital finance globally unrestricted whereas holding onto tight management inside Chinese language borders.

Deng Chao, CEO of HashKey Capital, remarked that Hong Kong’s progress supplies a “priceless reference” for future regulatory fashions on the mainland. Eddie Yue, chief government of the Hong Kong Financial Authority (HKMA), famous that guidelines might be “stricter to start with” however will evolve because the sector matures. The broader objective is obvious: restore Hong Kong’s function as a premier monetary hub after years of unrest and place it as a gateway for China’s Web3 ambitions.

America’s Stablecoin Act

Throughout the Pacific, the U.S. has additionally taken decisive steps. Final month, President Donald Trump signed the Guiding and Establishing Nationwide Innovation for U.S. Stablecoins Act (GENIUS Act) into legislation. The act requires stablecoins to be pegged to {dollars} or equally low-risk belongings, mandates registration with regulators, and enforces strict audit necessities. The laws seeks to bolster the greenback’s international supremacy in digital funds.

But questions linger in regards to the motivations behind it. Trump’s political base features a cohort of tech buyers and executives — usually referred to as the “crypto bros” — who bankrolled his 2024 marketing campaign in hopes of favorable coverage. Their affect is clear within the GENIUS Act’s passage. 

Skeptics additionally level to Trump’s private involvement in launching a $TRUMP meme coin, which surged by 300 % earlier than collapsing, producing what critics described as a “rug pull” that enriched insiders on the expense of retail patrons. These controversies have fueled suspicion that U.S. stablecoin coverage might serve political pursuits as a lot as financial technique.

China’s Multipolar Technique

Whereas Washington seeks to defend the greenback, Beijing is pushing for a multipolar foreign money order. The Folks’s Financial institution of China (PBOC) has launched a world operations heart for the digital yuan in Shanghai, with plans to combine it into cross-border funds and provide chain financing. Projected utilization of the e-CNY between Hong Kong and the mainland is anticipated to succeed in $8 billion in 2025.

Nonetheless, analysts stay cautious. J.P. Morgan argued that regardless of progress, the yuan is unlikely to overhaul the greenback quickly. In 2022, the U.S. greenback accounted for 88 % of worldwide international alternate transactions, in comparison with simply 7 % for the yuan. But throughout the BRICS bloc and amongst rising economies, China is gaining floor. On the 2025 BRICS summit in Rio de Janeiro, leaders reaffirmed their dedication to de-dollarization and referred to as for various settlement programs.

China’s CIPS has expanded considerably, linking with Russia’s SPFS community to bypass the SWIFT system. Commerce information exhibits momentum: China-Russia bilateral commerce reached $218 billion in 2024, a lot of it settled in yuan and rubles. Equally, India-Russia commerce hit $66 billion, with native foreign money preparations changing the greenback in lots of offers.

China’s Strategic Counterstrike

There was discuss Beijing launching a yuan-backed stablecoin on the very finish of August 2025, but nothing concrete has occurred on that entrance. This was precipitated by rising U.S. tariffs, gradual home progress, and monetary sanctions. A yuan-pegged stablecoin can be able to bypassing banking restrictions, allow liquidity to stream, and provide China extra leverage in international commerce. 

The U.S. Strikes Again

To not be outdone, the U.S. is experimenting with state-level innovation. Wyoming just lately launched the world’s first state-issued stablecoin. For some, this represents greater than a regional experiment; it’s a blueprint for a broader federal technique. One skilled famous that such initiatives might be “far more efficient than tariffs,” explicitly difficult China’s tight foreign money controls.

Europe’s Considerations

The ripple results of U.S. coverage are already being felt overseas. Tether’s U.S. dollar-pegged USDT stays the world’s most dominant stablecoin, making up almost 60 % of the $270 billion international market. With the GENIUS Act accelerating the adoption of dollar-backed stablecoins, European regulators are sounding alarms.

Jürgen Schaaf, adviser on the European Central Financial institution (ECB), warned that widespread use of U.S. greenback stablecoins in Europe might undermine euro financial coverage. He cautioned that if these belongings achieve traction for “funds, financial savings, or settlement,” eurozone devices would possibly face direct competitors. Schaaf emphasised that greenback dominance supplies Washington with strategic benefits, from cheaper debt financing to higher geopolitical leverage — all at Europe’s expense.

Implications for International Finance

The rising rivalry within the space of digital currencies between the U.S. and China displays a higher change: the rising fragmentation of the worldwide financial system. As an alternative of there being one high reserve, there could be a number of competing digital currencies, standing alongside completely different geopolitical blocks. On one stage, such fragmentation raises transaction prices and complicates commerce, however it’s also an expression of a shift within the international financial energy.

Tendencies are already seen. In accordance with IMF information, the greenback’s share of worldwide international alternate reserves fell from over 70% within the early 2000s to round 59% by 2021. Central banks in rising markets have been diversifying into gold whereas buying 244 metric tons in simply the primary quarter of 2025, the best quarterly quantity in years.

The IMF has warned that whereas digital cash might enhance effectivity, it additionally poses dangers if crises strike. One coverage word cautioned that “a shift to a multipolar reserve configuration might require international reserve issuers to increase liquidity backstops.” Students echo this concern. Yash Kalash of the Heart for Worldwide Governance Innovation warned that diverging monetary programs might spark “fragmentation, capital stream volatility, and regulatory disjunctures.”

Researcher Antonis Ballis discovered that geopolitical sanctions and declining belief in Western cost programs are pushing international locations towards various digital networks. He concluded that these programs are more and more used not only for effectivity but in addition as shields towards greenback publicity. 

Harvard economist Kenneth Rogoff framed the present second as probably the most vital turning level for the reason that finish of the gold normal, noting that whereas the greenback is more likely to stay dominant within the close to time period, it faces mounting competitors from the yuan and euro alike.

What’s to Come?

The race between the U.S. and China to dominate stablecoins isn’t merely a technological contest — it’s a wrestle for sovereignty and affect in the way forward for international finance. America is doubling down on dollar-backed belongings, whereas China is leveraging Hong Kong and getting ready yuan-based alternate options to chip away at Washington’s benefit. Europe, caught within the center, fears deeper dependency on the U.S. financial system.

Alisa, a devoted journalist on the MPost, focuses on cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a eager eye for rising developments and applied sciences, she delivers complete protection to tell and interact readers within the ever-evolving panorama of digital finance.

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