China Races to Challenge US Dollar Dominance with Stablecoin Push and New Regulations in Hong Kong

Key Points

• It seems likely that China is increasingly exploring stablecoins for cross-border payments, posing a potential challenge to the US dollar's global dominance.

• Research suggests this push involves leveraging Hong Kong's financial infrastructure and promoting yuan-pegged stablecoins, while the US is tightening regulations to maintain dollar influence.

• The evidence leans toward controversy, with debates over de-dollarization efforts and the effectiveness of stablecoins in reducing transaction costs.

Overview

China is making strides in stablecoin development, particularly through Hong Kong, to enhance the yuan's international role. This move is seen as a challenge to the US, which is also advancing its stablecoin regulations to preserve the dollar's dominance.

China's Efforts

Policy advisers and economists in China are urging the exploration of stablecoins for cross-border payments, with key figures like the People's Bank of China Governor highlighting their potential to revolutionize international finance. Hong Kong's new stablecoin rules, effective August 1, 2025, aim to support yuan-pegged stablecoins, backed by companies like JD.com and Ant Group.

US Response

The US has passed legislation like the GENIUS Act to regulate stablecoins, emphasizing US-backed options like USDC to maintain dollar dominance. Treasury Secretary Scott Bessent has stated that global users will likely favor US-backed stablecoins due to trust in American private sector regulation.

Implications

This competition could lead to increased use of the yuan in global trade, but challenges remain, including the current dominance of dollar-pegged stablecoins and regulatory hurdles in China.

Supporting URLs:

• Stablecoin Push Gains Ground in China in New Challenge to US

• China plays catch-up to the U.S. in stablecoin rivalry

• Betting on China's Stablecoin Ambitions in a Dollar-Dominated World

• China urged to embrace stablecoins as the US moves to cement its lead

• Hong Kong's Upcoming Stablecoin Rules to Shake Up US Dollar Dominance

Comprehensive Analysis of China's Stablecoin Push and Its Challenge to the US

This note provides a detailed overview of China's growing efforts to explore and adopt stablecoins for cross-border payments, positioning it as a potential challenge to the US dollar's global dominance. The analysis is based on recent news reports and financial analyses available as of 01:49 AM PDT on Wednesday, July 2, 2025, aiming to offer a comprehensive understanding for investors, policymakers, and observers.

Background and Context

Stablecoins, cryptocurrencies pegged to fiat currencies like the US dollar or the Chinese yuan, have gained attention for their potential to facilitate efficient cross-border payments. While the US dominates the stablecoin market with dollar-pegged options like USDC and USDT, China is increasingly exploring stablecoins to promote the yuan's internationalization, amid rising geopolitical tensions and de-dollarization efforts. This development is seen as a challenge to the US, which is taking steps to regulate and integrate stablecoins into its financial system to maintain dollar hegemony.

China's Stablecoin Initiatives

Research suggests that China faces growing calls from policy advisers and economists to explore stablecoins for cross-border payments, as highlighted in recent discussions. Key figures include:

• People's Bank of China (PBOC) Governor Pan Gongsheng, who in June 2025 stated that stablecoins could revolutionize international finance, emphasizing their role in addressing the fragility of traditional payment systems, which can be politicized and used for sanctions.

• Former PBOC Governor Zhou Xiaochuan, who discussed how US dollar-linked stablecoins facilitate dollarization at the same Shanghai event, underscored the need for China to counter this trend.

• Morgan Stanley's Chief China Economist Robin Xing, who suggested using Hong Kong as a testbed for offshore yuan-based stablecoins, avoiding Beijing's capital control rules, to maintain competitiveness in digital infrastructure.

Specific initiatives include:

• Hong Kong's Stablecoin Regulatory Framework: Effective August 1, 2025, Hong Kong introduced a licensing regime for fiat-referenced stablecoins, requiring 100% reserve backing, anti-money laundering (AML) compliance, and Hong Kong Monetary Authority (HKMA) licensing. Key players planning to seek licenses include JD.com, Ant Group's overseas arm, and Zhejiang China Commodities City Group. The regime mandates Hong Kong-based reserves and operational presence, with a capital requirement roughly three times that of Singapore, potentially deterring global issuers like Circle and Tether but attracting domestic players.

• JD.com's Plans: JD.com aims to apply for stablecoin licenses in major markets, projecting to cut cross-border payment costs by 90% and reduce settlement times to under 10 seconds, enhancing business efficiency.

• mBridge Project: The Bank for International Settlements (BIS) Innovation Hub's mBridge initiative, involving China, Saudi Arabia, and the UAE, aims to facilitate cross-border central bank digital currency (CBDC) transactions, challenging dollar hegemony, though it faces uncertainties after BIS pulled out over sanctions concerns.

• Digital Yuan (e-CNY): Launched in 2020, the e-CNY has seen transaction volumes exceed USD 7.3 trillion by June 2025, operational in 29 cities, but it accounts for only 0.16% of China's total monetary volume, struggling for traction due to its closed-loop design.

Li Yang from the National Institution for Finance and Development advocates a "dual track" approach, combining traditional efforts like currency swaps and the Cross-Border Interbank Payment System (CIPS) with offshore yuan-linked stablecoins via Hong Kong. Eswar Prasad from Cornell University notes that yuan-linked stablecoins may face limits without unifying onshore/offshore exchange markets, but could incentivize reforms.

China's wariness of cryptocurrencies due to financial stability and capital control concerns persists. Still, the growing interest in the yuan is evident, with 30% of China's goods trade settled in yuan in February 2025, the highest in a decade, though its global payment share remains modest.

Challenge to the US

The evidence leans toward China's stablecoin push posing a challenge to the US dollar's dominance, particularly in cross-border payments and digital finance. This challenge is multifaceted:

• De-Dollarization Efforts: Hong Kong's stablecoin regime aligns with Beijing's push for de-dollarization, especially in the Global South and Asia, promoting regional trade in local currencies. Hong Kong's status as the top offshore RMB hub, with a 1 trillion yuan liquidity pool, supports this effort.

• Currency Promotion: Yuan-based stablecoins could enhance the yuan's international role, countering the over 90% market share of US dollar-pegged stablecoins (end of 2024, CoinMetrics data). This is critical as the yuan's reserve share dropped from 2.8% in 2022 to 2.2% in 2024, reflecting challenges in global adoption.

• Geopolitical Tensions: Pan Gongsheng highlighted the fragility of traditional payment systems, which can be used for sanctions, underscoring the need for alternative systems like stablecoins to reduce reliance on the US dollar.

However, analysts note that catching up to US dollar-backed stablecoins is formidable, given the US's established market dominance and trust in its private sector regulation. Current stablecoin usage is mostly for crypto trading, not business payments, and regulators need to address risks like fraud and financial crime, with unclear classification as currencies or financial assets.

US Response and Countermeasures

The US is taking proactive steps to maintain dollar dominance, as outlined in recent legislative and policy actions:

• Stable Act and GENIUS Act: The US passed the Stable Act in April 2025, requiring banking licenses and federal oversight for stablecoin issuers. The Senate approved the GENIUS Act recently, tightening regulations to integrate stablecoins into the official financial clearing system, supporting President Donald Trump's digital asset agenda.

• Treasury Secretary Scott Bessent's Statements: On June 19, 2025, via an X post, and on June 30, 2025, on Bloomberg TV, Bessent emphasized that stablecoins, mostly pegged to the US dollar and backed by US assets like short-term Treasuries, could strengthen dollar dominance. He stated that global users will likely favor US-backed stablecoins like USDC over CBDCs from Europe or China, citing trust in American private sector regulation over government control elsewhere. Projections suggest stablecoin supply could reach USD 3.7 trillion by 2030.

• Market Integration: The US aims for cross-border payments without SWIFT, embedding the dollar in blockchain ecosystems, with companies like Circle (CRCL.US) seeing stock surges (3.8 times since early June listing), reflecting market confidence.

This creates a two-tiered system: China's state-backed digital yuan and potential yuan-linked stablecoins versus US-backed private stablecoins, with the US leveraging its financial infrastructure and regulatory framework to maintain leadership.

Comparative Analysis

To illustrate the differences, the following table compares key aspects of China and the US in stablecoin development:

Aspect	United States	China
Legislative Actions	- Passed Stable Act (April 2025), requiring banking licenses and federal oversight. - Senate approved Genius Act (recently).	- Passed stablecoin licensing regime in Hong Kong (June 2025, effective Aug. 1, 2025). - Uses administrative guidelines, not direct legislation.
Stablecoin Focus	- Focus on U.S. dollar-pegged stablecoins (e.g., USDC, USDT) for formal financial system integration. - Aims for cross-border payments without SWIFT.	- Potential for yuan-pegged stablecoins via Hong Kong. - Currently allows HKD and yuan-pegged stablecoins under new regime.
Market Dominance	- Over 90% of global $140 billion stablecoin market pegged to U.S. dollar (end 2024, CoinMetrics). - Circle stock surged 3.8 times since early June listing.	- Challenges U.S. dominance, criticized U.S. legislation as “digital dollar hegemony.” - e-CNY promoted but limited by closed-loop design.
Institutional Involvement	- N/A (not detailed in text).	- Guotai Junan International first Mainland-backed brokerage for virtual assets in Hong Kong. - CSC Financial, Haitong International exploring participation.
Regulatory Environment	- Incorporates stablecoins into official financial clearing system.	- Bans crypto trading/mining on Mainland; Hong Kong as testbed for yuan-based blockchain clearing.
Future Outlook	- Expected to rule supreme in blockchain-based settlements.	- Hong Kong may become launchpad for yuan-based stablecoins, but catching up is challenging.

Another table details key players and initiatives:

Entity/Initiative	Country	Details
JD.com	China	Plans to seek stablecoin licenses, aims for 90% cost reduction in cross-border payments.
Ant Group (overseas arm)	China	Planning to seek licenses in Hong Kong for stablecoin issuance.
JINGDONG Coinlink Technology	China	Key player in Hong Kong's stablecoin regime.
Standard Chartered Bank	China	Partnering with Animoca Brands, Hong Kong Telecommunications for stablecoins.
mBridge Project	Multi	BIS initiative involving China, Saudi Arabia, UAE for cross-border CBDCs.
Circle (CRCL.US)	US	USDC issuer, stock surged 3.8 times since early June listing.
Tether (USDT)	US	Major US dollar-pegged stablecoin, may face challenges in Hong Kong.

Risks and Challenges

Both nations face risks. For China, debt and deflation risks limit yuan adoption, and regulatory conflicts, such as Hong Kong's sandbox versus US sanctions, pose hurdles. Technological competition from US firms like Visa and Circle adds pressure. For the US, maintaining trust in private sector regulation amid global scrutiny is crucial, especially as stablecoins are projected to grow significantly.

Conclusion

The evidence leans toward China's stablecoin push gaining ground, with initiatives in Hong Kong and discussions around yuan-pegged stablecoins challenging the US dollar's dominance. However, the US's established market lead and regulatory advancements suggest a complex, ongoing rivalry. Investors and policymakers should monitor developments, especially Hong Kong's August 2025 implementation and US legislative outcomes, for long-term implications on global finance.

Supporting URLs:

• Stablecoin Push Gains Ground in China in New Challenge to US

• China plays catch-up to U.S. in stablecoin rivalry

• Betting on China's Stablecoin Ambitions in a Dollar-Dominated World

• China urged to embrace stablecoins as US moves to cement lead

• Hong Kong's Upcoming Stablecoin Rules to Shake Up US Dollar Dominance

标签:   游戏头条 资讯头条 ggamen科技资讯 ggamen科技 ggamen科技资讯头条 科技资讯头条 ggamen游戏财经 新闻网 科技新闻网 科技新闻 ggamen ggamen游戏新闻网 科技新闻 科技新闻网 新闻网 ggamen游戏财经 科技资讯头条 ggamen科技资讯头条 ggamen科技资讯 资讯头条 ggamen ggamen游戏新闻网 科技新闻 新闻网 ggamen游戏财经 科技资讯头条 ggamen科技资讯头条 ggamen科技 资讯头条 游戏头条