Market News
China has 'genius' stablecoin plan to challenge U.S. -
by Anand Sinha
China has 'genius' stablecoin plan to challenge U.S. originally appeared on TheStreet.
On July 18, President Donald Trump signed the GENIUS Act into law. The first major crypto legislation to become a law, it regulates stablecoins pegged to the U.S. dollar.
For those unfamiliar, a stablecoin is a type of cryptocurrency that strives to keep its value stable, in comparison to usually volatile cryptocurrencies like Bitcoin, by being pegged to a fiat currency or a commodity.
Trump believes his latest move would encourage the global adoption of the USD-pegged stablecoins and hence cement the dominance of the American national currency in international trade. The president's enthusiasm is understandable, given that the USD's share in the trade payments has been eroding over the past few years.
The Financial Times reported in August 2024 that while the USD payments declined from around 80% in 2010 to 40% in 2024, the renminbi payments rose from nearly zilch in 2010 to around 55% in 2024.
The renminbi or RMB is the national currency of China, the arch rival of the U.S. in trade. As the Trump administration attempts to recover the lost ground with USD-pegged stablecoins, China seems to be planning a similar move despite its skepticism around cryptocurrencies.
On Aug. 6, Financial Times reported that China is planning to launch its first stablecoins pegged to the renminbi. Since the country exercises a crypto ban throughout the mainland, Hong Kong is the testing ground of the project.
The region recently passed a law that lets licensed issuers launch stablecoins backed by any fiat currency. However, the authorities will permit only a “handful” of licenses starting in 2026, the report added.
How could it impact the dollar?
Stablecoins may look like just another crypto token, but they’re actually a powerful tool of monetary influence.
When Tether issues new stablecoins, it backs them with reserves that include real-world U.S. dollar assets. As of June 30, Tether holds over $127 billion in U.S. Treasuries (including $105.5B direct and $21.3B indirect), making it one of the largest holders of American debt globally.
That demand flows straight into U.S. financial markets. It’s why Washington, through laws like the GENIUS Act, is embracing USD-pegged stablecoins.
China's crypto dilemma
China's dilemma is crystal clear: how to embrace the crypto economy amid the challenge of controlling its financial system.
The FT report cited Rebecca Liao, CEO at the blockchain firm Saga, who remarked, “This is not technology that can be centrally controlled... When they invest in this technology it will be taken to places that they do not like.”
Join the discussion with CryptoWendyO on Roundtable here.
The Hong Kong Monetary Authority (HKMA), the region's central bank, has also underlined that stablecoins could be used in money laundering. The report said the bank will initially grant a license to only one of China’s four dominant state-owned banks.
Private players in China don't want to be left behind either.
JD.com, a prominent e-commerce company, is planning to launch a Hong Kong dollar-pegged stablecoin. The project is already in the pilot phase. Ant Group, an affiliate company of Jack Ma's Alibaba Group, is also eyeing stablecoin licenses in Hong Kong and Singapore.
However, China has been slow to enter the stablecoin race, and it will take a few years for us to know if it will succeed in its quest for de-dollarization.
