In early June 2025, Circle, one of the world’s largest stablecoin issuers, saw its stock surge from an IPO price of $31 to $180 by June 27. As the second-largest issuer of dollar-backed stablecoins, Circle’s market performance reflects growing global investor confidence in stablecoin technology. But beyond financial markets, stablecoins are emerging as a transformative force in cross-border payments and global monetary dynamics.
At the recent Lujiazui Forum, former People’s Bank of China Governor Zhou Xiaochuan highlighted a critical insight: when supported by existing financial infrastructure, dollar-backed stablecoins could deepen dollarization trends across multiple economies. This raises a pivotal question—amid rising skepticism about the US dollar’s long-term dominance, can stablecoins actually reinforce its international role? And what challenges lie ahead?
How Dollar Stablecoins Strengthen Global Dollar Use
Stablecoins are cryptocurrencies designed to maintain a stable value by being pegged to traditional fiat currencies—most commonly the US dollar at a 1:1 ratio. These digital assets combine blockchain’s core advantages—transparency, decentralization, low-cost transactions, and 24/7 global accessibility—with the price stability of government-issued money.
This dual nature has fueled rapid adoption. Traditional international remittances often take 3–5 business days and incur average fees of 6.35%, according to the World Bank. In contrast, stablecoin transfers on networks like Solana settle in seconds for less than $1. As a result, stablecoins are evolving beyond crypto trading into real-world applications such as cross-border trade settlements, payroll processing, investment clearing, and protection against local currency depreciation.
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The scale is already significant. The global stablecoin market now exceeds $260 billion, with over 240 million active holding addresses in the past year. Adjusted transaction volumes reached 1.4 billion, totaling $6.7 trillion in value. Notably, ARK Invest estimates that stablecoin payment volume surpassed combined Visa and Mastercard transaction values in 2024. The US Treasury Borrowing Advisory Committee (TBAC) projects the market could hit $2 trillion by 2028.
Crucially, dollar-backed stablecoins dominate this space, accounting for more than 95% of total supply. This dominance stems largely from the US regulatory environment, which—despite past caution—has shifted toward innovation-friendly policies. In June 2025, the US Senate passed the National Innovation Act to Guide and Establish American Stablecoins, formally recognizing stablecoins under federal law and creating a clear compliance framework.
Compare this with the EU’s MiCA (Markets in Crypto-Assets) regulation, implemented in 2024. While comprehensive, MiCA imposes stricter requirements that have dampened euro stablecoin development. Even major platforms like Binance delisted USDT in the EU due to compliance hurdles.
This regulatory divergence amplifies the dollar’s network effect—the self-reinforcing advantage where widespread usage attracts more users. With stablecoins making dollar transactions faster and cheaper globally, more individuals and businesses may opt for dollar-denominated settlements—even in regions traditionally outside US financial influence.
For example:
- In high-inflation or capital-controlled economies, individuals increasingly use dollar stablecoins to preserve wealth.
- Small enterprises leverage them for international payments without relying on traditional banking channels.
- Cross-border workers receive salaries instantly via blockchain wallets.
These trends effectively expand dollarization, increasing global demand for US-denominated assets and reinforcing confidence in the dollar’s reserve currency status. As US Treasury Secretary Scott Bessent noted, stablecoins not only extend dollar usage but also support sustained demand for US Treasury securities—further anchoring dollar supremacy.
Challenges to the Dollar’s Advantage
Despite these advantages, stablecoins alone cannot offset deeper structural risks facing the US dollar. Their impact remains additive rather than transformative—if underlying trust in US institutions erodes, no technological innovation can fully compensate.
Several concerns threaten long-term confidence:
- Political instability: Erratic trade policies and perceived threats to Federal Reserve independence undermine governance credibility.
- Fiscal imbalance: Persistent budget deficits raise sustainability questions. On May 17, 2025, Moody’s downgraded US sovereign credit due to deteriorating fiscal metrics.
- Overuse of financial sanctions: Countries like Russia have accelerated de-dollarization by shifting energy trades to rubles and boosting gold and yuan reserves. Nations including China, India, and Brazil are also diversifying away from dollar assets in bilateral trade.
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Moreover, other nations are catching up in stablecoin regulation. Since 2025, countries including the UK, Japan, South Korea, Australia, Turkey, Argentina, Nigeria, Panama, and the Cayman Islands have advanced legislative frameworks for digital currencies. If euro-, yen-, or renminbi-backed stablecoins gain traction, they could enable alternative global payment rails—potentially bypassing SWIFT and weakening dollar-centric networks.
Could this lead to a more multipolar monetary system? Possibly. When any currency can be digitized and transferred globally at near-zero cost, the playing field becomes fairer. The very feature that strengthens the dollar today—its integration with efficient blockchain infrastructure—could one day empower competitors.
The Strategic Case for Offshore RMB Stablecoins
As digital finance evolves, Renminbi internationalization must adapt. While the RMB ranks around fourth in global payment share (SWIFT data, 2024), its digital potential remains underutilized. Launching regulated offshore RMB stablecoins offers a strategic opportunity to compete in the new era of financial digitization.
An officially backed offshore RMB stablecoin would:
- Combine RMB’s growing economic weight with blockchain efficiency.
- Enable seamless cross-border transactions without dependence on dollar-clearing systems.
- Enhance trust through regulatory clarity and liquidity safeguards.
Even without formal approval, market-driven initiatives exist. Tether launched an offshore RMB stablecoin in 2019; TRON introduced TCNH in 2022; CNHC Group (now Trust Reserve) issued CNHC in 2023—though all remain small-scale.
Hong Kong stands out as the ideal launchpad. As the leading offshore RMB hub, it has been actively refining crypto regulations and positioning digital assets as key to maintaining its global financial relevance. Starting there—and later expanding to Shanghai’s free-trade zones or Hainan’s offshore financial试验区—could give China a first-mover advantage.
Given the strong network effects in digital currency adoption, timing is critical. Delay risks ceding ground permanently.
Frequently Asked Questions
Q: What is a stablecoin?
A: A stablecoin is a type of cryptocurrency pegged to a stable asset like the US dollar or euro. It combines blockchain efficiency with price stability, enabling fast, low-cost digital transactions.
Q: Why do dollar stablecoins dominate globally?
A: Due to favorable US regulatory developments and strong network effects, dollar stablecoins offer reliable infrastructure and broad acceptance—making them preferred tools for global payments and value storage.
Q: Can stablecoins replace traditional currencies?
A: Not entirely—but they can complement them, especially in cross-border contexts where legacy systems are slow or costly. Their role will grow as regulation matures.
Q: Do stablecoins threaten the US dollar’s dominance?
A: Not currently. Instead, they reinforce it by expanding usage. However, if other nations issue competitive digital versions of their currencies, balance could shift over time.
Q: Is Hong Kong likely to launch an official RMB stablecoin soon?
A: While no official timeline exists, Hong Kong’s proactive stance on crypto regulation makes it a strong candidate for piloting such a project in the near future.
Q: Are stablecoins safe for everyday use?
A: Reputable dollar-backed stablecoins with transparent reserves (like USDC) are generally considered secure. Users should verify issuer credibility and regulatory compliance before use.