China Expresses Concerns About the Influence of U.S. Dollar-Backed Stablecoins on Global Financial Systems

The stablecoin market has witnessed rapid growth to exceed $200 billion in 2025. Tether (USDT) and USD Coin (USDC) account for 90% of the stablecoin market.

China has expressed concerns about the influence of U.S. dollar-backed stablecoins on global financial systems, a report by CCXV reveals.

The Chinese government views U.S. dollar stablecoins as a threat to its financial independence, especially with the widespread acceptance and stability of the U.S. dollar enhancing the Dollar-backed stablecoins’ dominance. These features make dollar-backed stablecoins influential in global markets and attractive to investors.

China aims to improve its digital yuan to compete with U.S. stablecoins amid a push for regulatory clarity on stablecoins. Although China introduced a central bank digital currency (CBDC) early, it restricted the use of digital yuan to retail payments.

China must extend the capabilities of its digital currency beyond consumer payments to challenge USD-backed stablecoins. The Chinese government wants to expand digital currency applications to reach M1 (cash and demand deposits) and M2 (cash plus all deposits) levels to expand its utility in domestic and international markets.

China aims to integrate digital yuan with major international platforms and applications such as credit markets. The goal is to develop a stable digital currency and expand its applications to gain a competitive advantage in the stablecoin market.

Other countries have also expressed similar concerns about U.S. dominance in global financial systems. European officials recently expressed concerns about the influence of U.S. stablecoins.

Pierre Gramegna, managing director at European Stability Mechanism warns that dollar-backed stablecoins could undermine EU’s financial independence.

China seeks to make the digital yuan available across the world to boost the position of Chinese renminbi in global trade. The goal is to position its currency as a competitor to the dollar by expanding the use of its digital currency across domestic and international networks.

The aim is to reduce U.S. dollar stablecoin dominance through proper design and risk management controls. China aims to establish complete control over its financial future through the improvement of the digital yuan.

The goal is to strengthen the position of its Central Bank Digital Currency in global financial systems amid intense competition in digital currency markets.