The first year of global stablecoins: a new battlefield between China and the United States

Foresight News

No one expected that at the pessimistic moment of how the market innovation was in the crypto circle, welcoming what Paradigm founder Matt Huang called the "stablecoin super cycle". Since its listing on June 5, Circle, the first stablecoin stock, has soared from US$31 to above US$298.99, and has achieved a nearly 10-fold increase in less than half a month. Its exaggerated wealth effect once attracted people in the circle to rush to coin stocks to make gold.

Circle's stock market is booming in the US stock market, and has once again opened up the crypto circle's attention to the stablecoin market.

Stablecoins were born in 2014 and aim to solve the problem of violent fluctuations in the prices of traditional cryptocurrencies. USDT, first launched by Tether, is one of the most representative stablecoins on the market, with a value of 1:1 pegged to the US dollar and supports currency stability through US dollar asset reserves. The core concept of stablecoins is to use asset mortgages to maintain the stability of currency value, so that they have the convenience and decentralization characteristics of digital currency, and can avoid transaction risks caused by price fluctuations. In recent years, the adoption and application of stablecoins have increased exponentially, especially in cross-border payments, DeFi, RWA and other fields. The DeFi field has become the underlying asset for lending, pledging, and income farming.

According to DefiLlama data, as of June 25, 2025, the global stablecoin market has surpassed approximately **$252.9 billion**, with **USDT dominating over 62%** of the market share and **USDC following closely behind**. Together, they account for **more than 85%** of the total market. On-chain stablecoin transaction volume has reached **$20.2 trillion**, nearly **40% of Visa’s global payment volume**, highlighting its critical role in digital payments and cross-border settlements.  

### **Stablecoin Frenzy Attracts U.S. and Chinese Giants**  
This year, major tech and financial corporations worldwide have accelerated their foray into the stablecoin space, igniting fierce competition.  

- **U.S. Moves**:  
  - **PayPal** announced its USD-pegged stablecoin **PYUSD** is now available on the **Stellar network**, focusing on **cross-border remittances and SME financing**.  
  - **Walmart and Amazon** are exploring proprietary **USD-backed stablecoins** to **reduce payment costs** and create closed-loop consumer ecosystems.  
  - **Shopify** partnered with **Coinbase and Stripe** to enable merchants to accept **USDC payments on Base Chain**, covering consumers in **34 countries**.  

- **Asia’s Momentum**:  
  - **Ant Group’s** Ant International and Ant Digital Technologies have applied for **Hong Kong stablecoin licenses**, positioning the city as their global hub for compliant digital transactions.  
  - **JD.com’s** blockchain arm aims to secure a license by **Q4 2025**, planning to issue **HKD and multi-currency-pegged stablecoins** for cross-border payments, trading, and retail.  

### **Why Are Giants Rushing into Stablecoins?**  
Is this a fleeting trend or a **strategic necessity**?  

#### **1. Speed & Low Friction: The Ultimate Payment Tool**  
Traditional finance struggles with inefficiencies—**slow cross-border transfers (days-long waits), high fees, and rigid compliance checks**. In contrast, stablecoins offer:  
- **Near-instant settlements** (minutes vs. days).  
- **Fees under $1** (vs. banks’ hefty charges).  
- **No arbitrary limits or freezes** (unlike banks demanding passports for small transfers).  

**Real-world pain point**: SIG partner Michael Yuan shared his frustration with **DBS Singapore**—interrogated over a **$200 transfer**, then forced to visit HQ with his passport for a **$1,000 transaction**. Similar stories from Chinese users (e.g., withdrawal limits, invasive document requests) frequently trend on social media.  

Stablecoins also enable **programmable finance**, seamlessly integrating with **DeFi, supply chain finance, and retail apps**. Studies suggest they could **enhance credit availability** while digitizing monetary systems.  

#### **2. The Battle for Digital Financial Hegemony: Onshore vs. Offshore**  
The deeper driver? **A geopolitical tug-of-war over monetary influence**.  

- **U.S. Strategy**: Treasury Secretary Besant told the Senate (June 2025) that **dollar-pegged stablecoins are key to reinforcing USD dominance**. Analysts project the market could hit **$2 trillion+**.  
- **China’s Countermove**: By licensing **HKD-linked stablecoins**, Hong Kong aims to become a **neutral hub**, balancing dollar hegemony with Asia-centric digital finance.  

### **Conclusion: Stablecoins Are Inevitable**  
From **PayPal to Ant Group**, the race isn’t just about innovation—it’s about **reshaping global finance**. Banks’ inefficiencies and geopolitical tensions are accelerating this shift, making stablecoins the **bridge between old and new money**.  

### **Stablecoins: The New Battleground for U.S.-China Financial Dominance**  

#### **U.S. Embraces Stablecoins to Strengthen Dollar Hegemony**  
On June 19, 2025, U.S. Treasury Secretary Besant tweeted:  
> *"Cryptocurrencies do not threaten the dollar. In fact, stablecoins can reinforce its dominance. Digital assets are among the most significant phenomena today, yet long overlooked by governments. This administration is committed to making the U.S. the hub of digital asset innovation, and the GENIUS Act brings us closer."*  

The **GENIUS Act**, passed by the U.S. Senate on June 17 (68-30), establishes a **federal regulatory framework** for dollar-pegged stablecoins, mandating:  
- **1:1 reserve backing** (cash + short-term Treasuries).  
- **Monthly reserve audits** and **AML compliance**.  
- **Enhanced transparency** to boost demand for U.S. debt and solidify the dollar’s global role.  

**Corporate Moves**:  
- **Retail Giants**: Walmart and Amazon are developing proprietary stablecoins to **bypass Visa/Mastercard**, saving billions in fees.  
- **PayPal’s PYUSD** expanded to **Solana**, processing $3B+ in transactions.  
- **JPMorgan** launched **JPMD**, a deposit-backed token on Coinbase’s Base network, targeting institutional settlements.  

#### **China’s Counterstrategy: Digital Yuan + Hong Kong Experiments**  
At the **2025 Lujiazui Forum**, PBOC Governor Pan Gongsheng announced:  
- A **Digital Yuan International Hub** in Shanghai’s Lingang, piloting **offshore trade settlements**.  
- Blockchain-driven **CBDC-stablecoin integration** to slash cross-border payment chains.  

**Hong Kong’s Role**:  
- The **Stablecoin Ordinance** (effective Aug 1) introduces a **licensing regime**, attracting Ant Group and JD.com.  
- **JD.com** plans a **multi-currency stablecoin** (HKD/USD first), aiming to **cut cross-border costs by 90%** and settle in **10 seconds**.  
- **Ant Group** is testing stablecoins in Hong Kong’s regulatory sandbox, targeting **Belt & Road trade**.  

#### **The Great Stablecoin Race: U.S. vs. China**  
| **Strategy**          | **United States**                          | **China**                              |  
|-----------------------|-------------------------------------------|----------------------------------------|  
| **Approach**          | Private-sector USD stablecoins (USDC, PYUSD) + Federal oversight | State-led Digital Yuan + Hong Kong "offshore" trials |  
| **Key Players**       | PayPal, JPMorgan, Walmart, Visa           | Ant Group, JD.com, PBOC               |  
| **Goal**              | Cement dollar dominance                   | Expand RMB internationalization       |  

#### **Risks & Regulatory Warnings**  
- **UST’s Collapse Reminder**: Users must scrutinize **reserve transparency** and **redemption guarantees**.  
- **Hong Kong’s Strict Rules**:  
  - **No "launch first, comply later"**—unlicensed issuance is banned.  
  - **Governance neutrality** required (e.g., independent boards, no opaque parent control).  

#### **The Future: A Dual-Track Payment System**  
> *"Stablecoins won’t replace traditional payments but will reshape value flows—first in niches like cross-border trade, then as parallel infrastructure."*  
> — **Alex Zuo, Cobo VP**  

**Short-term**: Stablecoins will **nest within** traditional systems (e.g., e-commerce, freelancer pay).  
**Long-term**: They may evolve into a **new global settlement layer**, rivaling SWIFT.  

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**Disclaimer**: Views expressed are the author’s alone. This platform assumes no liability for accuracy or investment decisions.