The past month has seen stablecoins transition from obscurity to the spotlight, capturing widespread attention across financial markets and regulatory discussions.
Reducing Over-Reliance on the US Dollar
To understand the sudden surge in stablecoin interest, it’s essential to first define what they are.
Stablecoins are a type of cryptocurrency pegged to a reserve asset—typically a fiat currency like the US dollar—designed to maintain price stability while leveraging blockchain technology. Currently, USDT and USDC dominate the market, accounting for over 90% of stablecoin circulation.
This rapid adoption wasn’t always anticipated. In September 2021, Chinese regulators imposed a blanket ban on cryptocurrency trading due to concerns over financial instability. However, attitudes shifted in June 2025 when People’s Bank of China (PBOC) Governor Pan Gongsheng acknowledged stablecoins' potential in cross-border settlements, signaling regulatory openness.
A key driver behind this shift? The US "GENIUS Act" (May 2025), which formalized dollar-backed stablecoins as legitimate financial instruments, reinforcing the dollar’s global dominance. This development has accelerated other economies’ efforts to diversify away from dollar dependency—making stablecoins a strategic tool in international monetary reform.
Hong Kong has emerged as a testing ground for this transition. Its "Stablecoin Ordinance" (effective August 1, 2025) imposes strict reserve and licensing requirements, mirroring US regulations while positioning the city as a pioneer in regulated stablecoin adoption.
How Are Stablecoins Used?
Stablecoins are gaining traction in two major areas:
Cross-Border Payments
- Traditional systems (e.g., Visa, Mastercard) involve high fees (2–3% per transaction) and slow settlement (1–3 days).
- Blockchain-based stablecoin transfers enable near-instant, low-cost transactions, bypassing intermediaries.
Real-World Asset (RWA) Tokenization
- Assets like green energy projects or real estate can be tokenized and traded globally using stablecoins as settlement tools.
- Ant Group and other firms have already executed multi-million-dollar RWA deals in China.
For retail investors, stablecoins offer low-volatility, cash-like assets—a feature highlighted by Hong Kong’s recent approval of virtual-asset trading licenses for 40 financial institutions.
Who’s Leading the Stablecoin Charge?
Key players in the race for stablecoin adoption include:
- Ant Group: Applied for a Hong Kong stablecoin license.
- JD.com: Plans to secure a license by Q4 2025.
- Standard Chartered, HSBC, Deutsche Bank: Actively developing Web3.0 and stablecoin infrastructure.
Industry experts predict global monetary convergence toward a handful of dominant stablecoins, with Hong Kong serving as a critical hub for renminbi internationalization.
FAQs
Q: Are stablecoins legal?
A: Regulations vary. The US and Hong Kong have established frameworks, while other regions are still drafting policies.
Q: How do stablecoins differ from Bitcoin?
A: Unlike volatile cryptocurrencies, stablecoins are pegged to stable assets (e.g., USD), minimizing price fluctuations.
Q: Can stablecoins replace banks?
A: Not entirely—but they streamline payments and reduce reliance on traditional banking systems for cross-border transactions.
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The rise of stablecoins marks a pivotal shift in global finance—one that balances innovation, regulation, and monetary sovereignty. Stakeholders from policymakers to investors are watching closely as this space evolves.