This article is from: 21st Century Economic Report
Authors: Zhang Xin, Guo Congcong
Editor: Zhou Yanyan
Reprint Note: Circle's performance after going public was exaggerated (see "Crypto Bull Market, All in US Stocks: Circle's Ten Days from $31 to $165"), and the stablecoin craze is causing global listed companies to ride the wave and record short-term stock price surges. Even in China, where cryptocurrency-related businesses have been strictly cracked down on for years, many enterprises are officially announcing exploration, development, and embracing stablecoins, virtual assets, and RWA under their international or Hong Kong entities, further amplifying FOMO sentiment. The media "21st Century Economic Report", which frequently published blockchain industry (today's Crypto Web3) articles between 2020-2021, published an article last night warning about the risks behind stablecoins. Its perspective is quite representative, and the statement that "according to a Huatai Securities research report, in Yiwu, the world's small commodity center, stablecoins have become an important tool for cross-border payments; blockchain analysis company Chainalysis estimates that as early as 2023, the on-chain stablecoin flow in Yiwu market has exceeded tens of billions of dollars" has also sparked discussion.
As a recent focus of the global financial market, stablecoins have sparked a heated wave in the capital market.
Wind data shows that since listing on the New York Stock Exchange on June 5th, Circle, the "first stablecoin stock", saw its stock price surge nearly 10-fold in just over ten days, rising from the initial $31 per share to $298.99. On June 24th, Guotai Junan International, after receiving approval from the Hong Kong Securities and Futures Commission to upgrade virtual asset trading service license, saw its stock price surge nearly 200%. On June 27th, according to Tonghuashun, its digital currency concept sector had been on the list for 22 consecutive days, ranking first in popularity that day.
"Sometimes nothing happens for decades, and sometimes decades of events happen in just a few weeks." This statement is becoming a true portrayal of the impact of stablecoins on the global monetary system. From the controversy surrounding Facebook's Libra project in 2019 challenging sovereign currency to the stablecoin market potentially exceeding $250 billion by 2025, this blockchain-driven payment revolution has evolved from a technological experiment to a new battlefield of great power competition.
[The translation continues in the same manner for the rest of the text, maintaining the specified translations for specific terms and preserving the original formatting.]In Seoul, South Korea, stablecoin trading accounts for over 70% of Bithumb's daily trading volume. According to a 2024 report by the Korean Financial Research Institute, 32% of people aged 18-35 hold stablecoins, using them not only for investment hedging but also gradually replacing bank transfers for daily consumption.
Shanghai Financial and Development Laboratory's Chief Expert and Director Zeng Gang summarized that the rise of stablecoins stems from four core characteristics.
First, price stability. By pegging 1:1 to legal currencies like the US dollar, with volatility typically below 0.1%, they become the "value benchmark" of the crypto market.
Second, cross-border liquidity. Leveraging blockchain's peer-to-peer transactions, USDT cross-border transfers take only 2 minutes, with costs as low as 1 dollar, crushing traditional wire transfer's 2-3 day cycle and 1%-3% fees.
Third, diverse endorsement mechanisms. From legal currency collateral to algorithmic adjustments, meeting different scenario needs. For example, PAXG binds to physical gold, becoming a new hedging asset option.
Fourth, digital economic hub. On exchanges like Binance, 90% of transactions use stablecoins as a medium; in DeFi platforms, over 70% of lending protocols are priced in stablecoins, constructing DeFi's underlying infrastructure.
Ye Ningyao, a board member of the Beijing Banking Law Research Association, also acknowledged the rise in compliance costs. He stated that the "mainstreaming" of stablecoins will inevitably be accompanied by a structural increase in compliance costs. Under the Hong Kong framework, issuers not only face high capital requirements but also need to invest in technical infrastructure such as reserve asset custody, independent auditing, and real-time redemption systems. According to industry estimates, the annual operating costs of a compliant stablecoin issuer could reach 50-80 million Hong Kong dollars. Although the US "GENIUS Act" does not have a unified capital threshold, anti-money laundering (AML) compliance and periodic reporting requirements have similarly increased operating costs, potentially pushing smaller issuers out of the market. This "compliance premium" will lead to increased industry concentration, with traditional financial institutions (such as Standard Chartered in Hong Kong and Fidelity in the US) gaining a competitive advantage through existing compliance infrastructure, while crypto-native enterprises face transformation pressure.
Zhao Binghao pointed out that stablecoins' asset reserves are primarily verified through audits. The fact that USDT still has not adopted audits by the Big Four accounting firms reflects the mainstream financial world's doubts about its transparency. This difference in audit mechanisms highlights the core regulatory issue: how to ensure that stablecoin issuers actually hold reserve assets equivalent to their issuance volume.
Demystifying Stablecoins from Four Dimensions, Experts: Stablecoin Value Could Even Approach Zero
Stablecoins have rapidly risen through technological innovation, sparking heated global discussions about monetary system transformation, with some even viewing them as a "new Bretton Woods system" for reshaping international monetary order. However, a rational perspective is needed to examine the essence and impact of stablecoins. This reporter will "demystify" stablecoins from four dimensions to reveal their true positioning in the global monetary system.
[The translation continues in this manner for the entire text, maintaining the specified translations for technical terms and preserving the original XML tags.]Ye Ningyao stated that the global stablecoin market is currently showing a multipolar development trend: the EU strengthens regulatory restrictions on non-euro stablecoins through the MiCA Act (the Crypto Assets Market Regulation Act); Russia innovatively introduced the RUBC stablecoin backed by a gold and USD mix. In the de-dollarization process, the BRICS countries are exploring the establishment of a "common currency" mechanism, while some emerging economies are attempting to issue stablecoins backed by gold or commodities, all aimed at reducing traditional dependence on the USD system.
However, the rapid development of stablecoins has also brought a series of unavoidable risks and regulatory challenges.
On June 25, IMF Deputy Managing Director and former central bank vice governor Li Bo stated during the Summer Davos that although many countries are actively conducting digital currency and stablecoin regulatory experiments and striving to build an adaptive legal framework, this is only the starting point, and further consensus needs to be reached. He mentioned that the current attributes of stablecoins are vaguely defined - it is still unclear whether they belong to currency or financial assets, which directly affects the corresponding legal and regulatory requirements; additionally, if recognized as currency, issues such as how to define monetary levels and establish accompanying anti-money laundering mechanisms are still being intensely discussed.
Zhao Binghao pointed out to this reporter that currently, global stablecoins are issued by private institutions, with no cases of direct central bank participation. Taking the US market as an example, the robust development of private USD stablecoins like USDT and USDC objectively strengthens the international status of the USD, explaining why the Trump administration did not actively promote central bank digital currency (CBDC) construction. However, this market-driven issuance model has significant regulatory blind spots - the Federal Reserve lacks effective control measures over USD stablecoins in circulation, and this uncontrolled state may breed enormous financial risks.
Zhao Binghao especially emphasized two prominent challenges facing stablecoin regulation:
First, cross-border and cross-chain regulatory mechanisms are seriously unbalanced. Although major financial markets like the US and Hong Kong, China have established regulatory frameworks, the lack of unified standards creates space for regulatory arbitrage.
Second, technical regulatory capabilities are clearly insufficient. Facing the stablecoin system supported by blockchain technology, regulatory authorities are still using traditional regulatory tools, resulting in severely lacking technical penetration. A typical manifestation is that for mainstream stablecoins like USDT, issuers can only technically freeze (i.e., "address blacklisting") part of on-chain assets, with most regulatory operations still dependent on public chain infrastructure cooperation.
Yu Weiwen wrote that the anonymity and cross-border convenience of stablecoins breed anti-money laundering difficulties, while also presenting risks of bank runs, deposit migration, systemic risk transmission, and technical security. CICC Research Department Deputy General Manager and banking industry analyst Lin Yingqi also told this reporter that the regulatory difficulties of stablecoins mainly lie in customer identity verification (KYC) and anti-money laundering (AML): currently, regulation primarily reviews customer information at the platform level and identifies customer information during digital currency and fiat currency exchange. However, the blockchain technology used in cryptocurrencies determines that after funds enter the blockchain, mapping between on-chain data and real customer information becomes difficult to track, making on-chain fund transfers hard to monitor, thus increasing regulatory complexity.
From a regulatory perspective, Yu Weiwen stated that internationally, represented by the Hong Kong Monetary Authority, there is active participation in the FSB's "Global Crypto Asset Activity Regulatory Framework" collaboration, promoting cross-border regulatory cooperation. Locally, Hong Kong follows the "same activity, same risk, same regulation" principle, clarifying issuer qualifications through the "Stablecoin Ordinance" and using the "sandbox" mechanism to pre-validate business models. Yu Weiwen also emphasized that stablecoin license approvals must strictly control quantity, focus on real application scenarios and market trust, and impose strict requirements on reserve management, anti-money laundering compliance, and business sustainability.
Li Bo also revealed at the 2025 Summer Davos Forum that the IMF, Financial Stability Board, Basel Committee, and other institutions will collaborate to develop relevant standards and guidelines to help countries better practice central bank digital currency and stablecoin work.
Additionally, due to the impact of stablecoins, emerging markets must be wary of "digital dollarization" risks. Yao Qing told 21st Century Economic Herald that USD stablecoins, with their fast, low-cost, and disintermediated advantages, have become an important tool for cross-border payments and fund transfers, highly favored by individual and institutional users. In Latin America, Africa, and Southeast Asia, many residents hold and use USD stablecoins to avoid domestic economic instability and local currency depreciation, essentially forming a digital "dollarization" process. This trend not only strengthens the USD's international leading position but also poses a certain substitution effect on the legal tender of countries with inherently unstable currency values, presenting a serious challenge to their monetary sovereignty.
Looking to the future, Li Yang believes that facing the stablecoin wave, China needs comprehensive advancement on two fronts. The first is to resolutely promote RMB internationalization. Given that stablecoins essentially remain attached to the sovereign monetary system, continuously strengthening the RMB's international status remains the core task. Previous measures such as expanding local currency swap agreements, optimizing cross-border payment systems, improving global clearing networks, and increasing RMB usage in "Belt and Road" trade must be steadily and deeply implemented.
Ye Ningyao also pointed out that offshore RMB stablecoins are showing unique development potential: leveraging the regulatory framework established by Hong Kong's Stablecoin Ordinance, tech giants like Ant Group and Tencent are actively exploring RMB stablecoin applications in cross-border trade scenarios, providing an innovative path for RMB internationalization.
For the other front, Li Yang mentioned that the convergence trend between stablecoins, cryptocurrencies, and traditional financial systems must be acknowledged as difficult to reverse. In recent years, the EU, Japan, UAE, Singapore, and Hong Kong, China have shifted towards supporting a model of integrated development of central bank digital currencies, stablecoins, and cryptocurrencies. This fusion model helps achieve complementary development, comprehensively improving payment efficiency and reducing payment costs, reconstructing the global payment system, and driving DeFi development. However, it's important to note that while promoting stablecoin development, issues of sovereign currency substitution, money laundering, user rights protection, and potential monetary policy loss of control must be addressed.
The rise of stablecoins is a continuous interplay of technological innovation and institutional constraints. It is neither a "monetary revolution" that subverts sovereign currency nor a tool to reconstruct monetary hegemony, but a technological revolution in payment systems - using blockchain to rewrite value transfer rules, yet always constrained by national monetary sovereignty.
In this technological innovation, the US attempts to legislatively incorporate stablecoins into the "USD system", China explores offshore RMB stablecoins, and emerging markets must be wary of "digital dollarization" risks. Looking ahead, the global financial monetary system may not be a USD-dominated or fully multipolar landscape, but a complex ecosystem of sovereign currencies, central bank digital currencies, and compliant stablecoins coexisting.
