Stablecoin Showdown: How China And The US Are Battling For Global Financial Power
John: Hi everyone, I’m John, a tech blogger specializing in Web3, metaverse, and blockchain topics for my site. Today, we’re diving into the ongoing competition between China and the US over stablecoins, which are digital currencies designed to hold steady value, and how this ties into global financial influence.
Lila: That sounds intense, John—like a real digital arms race! Readers are probably wondering how these two superpowers are using stablecoins to gain an edge in finance. Can you start by explaining what stablecoins are?
Basics of Stablecoins
John: Sure, Lila. Stablecoins are cryptocurrencies pegged to stable assets like the US dollar or gold to minimize price swings. For example, popular ones like USDT or USDC aim to always be worth about $1.
Lila: Got it—so they’re like digital cash that doesn’t fluctuate wildly? Why are they important in this US-China showdown?
John: Exactly. In the past, stablecoins grew rapidly; by early 2025, their global market cap exceeded $200 billion, according to S&P Global Ratings. They facilitate cross-border payments and bridge traditional finance with digital ecosystems.
Historical Background
Lila: Let’s go back in time. How did this competition start?
John: In the past, the US dollar has dominated global finance, with stablecoins like those backed by US Treasuries reinforcing that. China launched its digital yuan (e-CNY) around 2020 to modernize payments and challenge dollar dominance, but stablecoins have added a new layer since then.
Lila: Interesting. So China sees stablecoins as a threat?
John: Yes, commentary from China Economic Times in 2025 highlighted that stablecoins could cement USD dominance and endanger China’s monetary control. Meanwhile, the US has been deliberating federal legislation to regulate them.
Current Developments in the US
Lila: What’s happening right now in the US?
John: Currently, as of 2025-09-13, the US is pushing for stablecoin regulations through acts like the proposed GENIUS Act, which advisors to the Treasury Secretary see boosting demand for US Treasuries. Forbes reported on 2025-05-05 that stablecoins might surpass China’s holdings of US Treasuries by 2028.
John: Stablecoins are gaining momentum with regulatory tailwinds; a Forbes article from 2025-09-12 notes rising institutional adoption and demand for faster global payments.
Lila: That makes sense. Any fun fact here? (Hoping for a light one!)
John: Well, it’s like stablecoins are the reliable sidekick in the crypto world—always there to steady the ship. But seriously, compliance varies by jurisdiction; always check official documents for your area.
Current Developments in China
Lila: And on China’s side? Are they fighting back?
John: Currently, China is backing global stablecoin oversight with calls for real-time reserve checks and code-level controls, as per Cryptonews on 2025-09-11. They’re considering yuan-backed stablecoins to challenge USD ones, with a State Council review in August 2025.
John: An East Asia Forum piece from 2025-08-22 points out that while stablecoins offer tools for China’s ambitions, their decentralized nature conflicts with China’s controlled financial system.
Lila: So it’s a strategic rethink for them. What about transaction volumes?
John: Stablecoin transaction volumes surged 92% year-over-year to $3 trillion in August 2025, fueled by global adoption, according to AInvest.
Global Implications and Use Cases
Lila: How does this battle affect the rest of the world?
John: It could reshape global finance; the Lowy Institute on 2025-08-11 described competing visions for digital currency regulation revealing broader ambitions. Stablecoins are used for cross-border trade, decentralized finance, and even in regions like the EU with comprehensive regulations.
Lila: Can you give some practical examples?
John: Sure, here’s a quick list of common use cases:
- Cross-border payments: Faster and cheaper than traditional wires, like sending money from the US to Asia instantly.
- Decentralized finance (DeFi): Lending or borrowing without banks, using stablecoins as collateral.
- Bridging traditional finance: Institutions hold stablecoins backed by Treasuries for liquidity.
- Retail adoption: Everyday users in emerging markets use them to hedge against local currency volatility.
John: Remember, these are general examples; regulations can limit access in places like China, where crypto trading is restricted.
Risks and Regulations
Lila: Sounds powerful, but what are the risks?
John: Risks include liquidity issues if reserves aren’t managed well—think of past events like the 2022 TerraUSD collapse. Regulators worldwide are stepping up; the EU, Hong Kong, and Singapore have comprehensive rules as of 2025.
Lila: How are the US and China handling safeguards?
John: In the US, focus is on stringent reserve requirements. China urges coordinated global oversight with third-party audits. A caution: Regulatory compliance varies by jurisdiction; always consult official sources and avoid unregulated platforms.
Looking Ahead
Lila: What’s coming next in this showdown?
John: Looking ahead, stablecoins might hit a trillion-dollar market, as suggested in a 2025-09-09 MarketMinute article. China could launch its own via Hong Kong to counter US dominance, while the US advances legislation.
Lila: Will this change everyday finance?
John: Possibly—posts on X from experts like Coin Bureau in June 2025 warn of sovereignty threats, and recent ones from September 2025 highlight the geopolitical rivalry intensifying. But it’s all based on current trends; no guarantees.
John: Wrapping up, this stablecoin battle between China and the US is a fascinating glimpse into the future of money—blending tech, policy, and power. It’s exciting to see how digital tools are evolving global finance, but remember, this is for education only, not advice. Thanks for joining us!
Lila: Great chat, John—key takeaway is that stablecoins are tools for stability in a changing world, but staying informed on regulations is crucial for anyone interested.
This article was created based on publicly available, verified sources. References:
- Original Source
- Stablecoin Regulation Gains Global Momentum | S&P Global Ratings
- China and America in a stablecoin race that could reshape global finance | Lowy Institute
- Why Stablecoins May Surpass China In U.S. Treasury Holdings By 2028
- Stablecoins prompt strategic rethink of China’s financial strategy | East Asia Forum
- Why Stablecoins Are Gaining Momentum Right Now—Regulatory Tailwinds Included
- China Backs Global Stablecoin Oversight, Code-Level Controls
- Stablecoins Surge: A Trillion-Dollar Tsunami Reshapes Global Finance in 2025
- Stablecoins Surge on Global Stage as Finance’s New Bridge