Stablecoin Showdown: How China And The US Are Battling For Global Financial Power
Stablecoins have emerged as the newest area within the rising monetary rivalry between the United States and China. Unlike risky cryptocurrencies equivalent to Bitcoin, stablecoins preserve a hard and fast worth by pegging themselves to an underlying asset — usually the U.S. greenback or the Chinese 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 isn’t just about know-how; it’s about who controls the way forward for international finance.
Hong Kong’s Stablecoin Push
In May 2025, Hong Kong passed the Stablecoins Bill, 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 scale back reliance on the U.S. greenback. Alongside initiatives such because the Cross-Border Interbank Payment System (CIPS), BRICS Pay, and the digital yuan, Hong Kong’s stablecoin ecosystem might assist China broaden worldwide commerce outdoors of Washington’s attain.
The line is sort of clear right here: Hong Kong can pursue government-backed stablecoin innovation, however the mainland stays adamant on limiting personal cryptocurrencies. The Chinese authorities views its CBDC (digital renminbi) way more favorably than any decentralized asset. This approach, China has the chance to experiment with digital finance globally unrestricted whereas holding onto tight management inside Chinese borders.
Deng Chao, CEO of HashKey Capital, remarked that Hong Kong’s progress offers a “helpful reference” for future regulatory fashions on the mainland. Eddie Yue, chief government of the Hong Kong Monetary Authority (HKMA), famous that guidelines might be “stricter at first” however will evolve because the sector matures. The broader objective is evident: 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
Across the Pacific, the U.S. has additionally taken decisive steps. Last month, President Donald Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) into regulation. The act requires stablecoins to be pegged to {dollars} or equally low-risk property, mandates registration with regulators, and enforces strict audit necessities. The laws seeks to strengthen the greenback’s international supremacy in digital funds.
Yet questions linger in regards to the motivations behind it. Trump’s political base features a cohort of tech traders and executives — usually known 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 p.c earlier than collapsing, producing what critics described as a “rug pull” that enriched insiders on the expense of retail consumers. These controversies have fueled suspicion that U.S. stablecoin coverage could serve political pursuits as a lot as financial technique.
China’s Multipolar Strategy
While Washington seeks to defend the greenback, Beijing is pushing for a multipolar forex order. The People’s Bank of China (PBOC) has launched a world operations middle 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.
Still, 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 p.c of world overseas change transactions, in comparison with simply 7 p.c for the yuan. Yet inside the BRICS bloc and amongst rising economies, China is gaining floor. At the 2025 BRICS summit in Rio de Janeiro, leaders reaffirmed their dedication to de-dollarization and known as for various settlement methods.
China’s CIPS has expanded considerably, linking with Russia’s SPFS community to bypass the SWIFT system. Trade knowledge reveals momentum: China-Russia bilateral commerce reached $218 billion in 2024, a lot of it settled in yuan and rubles. Similarly, India-Russia commerce hit $66 billion, with native forex preparations changing the greenback in lots of offers.
China’s Strategic Counterstrike
There was speak about 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 development, and monetary sanctions. A yuan-pegged stablecoin could be able to bypassing banking restrictions, allow liquidity to circulate, and supply China extra leverage in international commerce.
The U.S. Strikes Back
Not to 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 may very well be “far more efficient than tariffs,” explicitly difficult China’s tight forex controls.
Europe’s Concerns
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 p.c 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 Bank (ECB), warned that widespread use of U.S. greenback stablecoins in Europe might undermine euro financial coverage. He cautioned that if these property achieve traction for “funds, financial savings, or settlement,” eurozone devices may face direct competitors. Schaaf emphasised that greenback dominance offers Washington with strategic benefits, from cheaper debt financing to larger geopolitical leverage — all at Europe’s expense.
Implications for Global Finance
The rising rivalry within the space of digital currencies between the U.S. and China displays a larger change: the rising fragmentation of the worldwide financial system. Instead of there being one high reserve, there might be a number of competing digital currencies, standing alongside totally different geopolitical blocks. On one degree, such fragmentation raises transaction prices and complicates commerce, however additionally it is an expression of a shift within the international financial energy.
Trends are already seen. According to IMF knowledge, the greenback’s share of world overseas change 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 purchasing 244 metric tons in simply the primary quarter of 2025, the very best quarterly quantity in years.
The IMF has warned that whereas digital cash could enhance effectivity, it additionally poses dangers if crises strike. One coverage notice cautioned that “a shift to a multipolar reserve configuration could require international reserve issuers to broaden liquidity backstops.” Scholars echo this concern. Yash Kalash of the Center for International Governance Innovation warned that diverging monetary methods might spark “fragmentation, capital circulate volatility, and regulatory disjunctures.”
Researcher Antonis Ballis discovered that geopolitical sanctions and declining belief in Western fee methods are pushing nations towards various digital networks. He concluded that these methods are more and more used not only for effectivity but additionally as shields in opposition to 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 prone 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 just isn’t merely a technological contest — it’s a battle for sovereignty and affect in the way forward for international finance. America is doubling down on dollar-backed property, whereas China is leveraging Hong Kong and making ready yuan-based options to chip away at Washington’s benefit. Europe, caught within the center, fears deeper dependency on the U.S. financial system.
The put up Stablecoin Showdown: How China And The US Are Battling For Global Financial Power appeared first on Metaverse Post.
