The Stablecoin Boom and USD's Role

Stablecoins, known for their price stability because they are pegged to assets like the US dollar, have become a crucial bridge between traditional finance and crypto.

The stablecoin market has surged to a staggering capitalization of $240 billion, showcasing the remarkable growth of this asset class.

According to CoinGecko data, Tether (USDT) and USD Coin (USDC) together hold a dominant 83% share of the global stablecoin market. Nevertheless, the explosion of USD-pegged stablecoins has raised concerns among Chinese economists, fearing that it could further strengthen the US dollar’s dominance.

The Stablecoin Boom and USD’s Role

Stablecoins, known for maintaining a stable price peg to assets like the US dollar, have become a crucial bridge between traditional finance and crypto.

According to CoinGecko data, the market capitalization of stablecoins has shot up from $133 billion in 2024 to $240 billion by early 2025. This surge showcases the growing acceptance of stablecoins in crypto trading, cross-border payments, and decentralized finance (DeFi).

USDT and USDC, the two largest stablecoins, are leading this market capitalization. President Donald Trump’s support has partly fueled their rapid growth. Recently, Trump urged Congress to pass stablecoin legislation to strengthen the USD’s global position.

“I’ve called on Congress to create simple, common-sense rules for stablecoins and market structure. With the right legal framework, institutions large and small will be enabled to invest, innovate, and take part in one of the most exciting technological revolutions in modern history,” said Donald Trump.

China’s Concerns: Stablecoins and Financial Power

The dominance of USD-pegged stablecoins has significant economic and geopolitical implications. Chinese economist Zhang Ming argues that stablecoins are a trading tool for the US to maintain economic power in the digital era.

“Once the US dollar stablecoin links the international credit of the US dollar with the application scenarios of the virtual world more closely, it may greatly consolidate the hegemony of the US dollar,” said Zhang Ming.

This is particularly concerning for China, which has been developing the Cross-Border Interbank Payment System (CIPS) to reduce reliance on SWIFT and counter US financial sanctions. If USD stablecoins come to dominate international payments, it could undermine China’s efforts to minimize the USD’s influence.

This view is shared by EU Officials, who have also expressed concerns that the US push for stablecoins could destabilize the Euro.

To counter this, Zhang Ming suggests that China should concentrate on deploying the China Digital Yuan (e-CNY). It is the Chinese CBDC being rolled out by the People’s Bank of China (PBoC), envisioned as a direct competitor to USD stablecoins.

The adoption of e-CNY is quickly advancing. According to the Atlantic Council, the total transaction value of e-CNY reached 7 trillion yuan ($986 billion) as of June 2024, nearly quadrupling from 1.8 trillion yuan ($253 billion) in July 2023. By July 2024, the e-CNY app had attracted 180 million individual users, with cumulative transaction value reaching 7.3 trillion yuan ($1 trillion) in pilot regions, according to Euromoney.

Moreover, according to Ledger Insights, the circulation of e-CNY also grew from 13.61 billion yuan in 2022 to 16.5 billion yuan by June 2023. These figures provide insight into China's swift actions in pushing for domestic adoption while setting the stage for international expansion.

Integrating e-CNY into cross-border payments is a crucial part of this strategy. Projects like mBridge, a collaboration between PBoC and the Bank for International Settlements (BIS), expanded trials with 11 other central banks in 2024, showcasing its potential to compete with USD stablecoins in global trade.

However, for this endeavor to succeed, China faces challenges such as capital flow restrictions and concerns over transparency in its financial system, which must be addressed forスムーズに進出を進めるために克服しなければなりません。