Opinion articles present diverse opinions and do not represent the position of (WEB3+)
The battle for the throne of digital currency
400 years ago, Spanish silver conquered global trade, established monetary hegemony, and dominated the world! Today, the market value of stablecoins, a form of "digital cash," has soared to $200 billion, changing global transactions. The US dollar stablecoin took the initiative and seized 80% of the market! China is not willing to be outdone and is challenging the digital throne of the US dollar with its RMB stablecoin and Hong Kong dollar stablecoin!
As a novice investor in Hong Kong or Taiwan, are you curious about how China’s strategies are disrupting the market? How will this digital currency war change the future? Follow us, from history to the future, to uncover this ultimate chess game! This article is for information reference only and is not investment advice.
The challenge of US dollar stablecoin: Why do we need RMB and Hong Kong dollar stablecoins?
US dollar stablecoins (such as USDT and USDC) dominate 80% of market transactions, but they bring three major problems to China and Hong Kong:
- Transactions are controlled by the United States: Companies using USD stablecoins may be restricted by US rules (such as OFAC sanctions). Once an account is frozen due to politics, trading comes to a halt. Just like when you use someone else’s bank card, it may be blocked at any time.
Exchange is troublesome and expensive: When a Hong Kong company receives USDT, it must first exchange it for US dollars and then for Hong Kong dollars. The handling fee is as high as 0.7-1%, and it also takes 2-3 days to wait. For example, Hong Kong e-commerce companies receive USDT payments and convert them into Hong Kong dollars to pay store rent, which is costly and time-consuming.
It is difficult for the RMB to go global: the US dollar accounts for 58% of global foreign exchange reserves (International Monetary Fund - Currency Composition), while the RMB accounts for only 2.5%. Chinese companies are often forced to use U.S. dollars, which increases transaction fees and exchange rate risks. Just like you want to buy something with Hong Kong dollars, but the store only accepts US dollars.
RMB stablecoin and Hong Kong dollar stablecoin can solve these problems. The RMB stablecoin makes "Belt and Road" transactions faster and cheaper; the Hong Kong dollar stablecoin relies on Hong Kong's international trust to attract global users and work together to reduce US dollar control. But how to make these two stablecoins accepted globally? Let us look for the answer from history.
Historical Lessons: The Secret of Resource and Network Hegemony
How does monetary hegemony come about? Here are three historical stories:
400 years ago, Spain controlled the silver mines in South America, producing 80% of the silver. It used the Manila Galleon to promote the silver dollar, and even the Ming Dynasty in China used it to collect taxes. In the 1800s, Britain relied on textile and railway technology to promote the pound through London banks and colonies, using gold to guarantee its value. From the 1900s to the present, the United States has relied on oil trade and military power to make the US dollar account for 58% of global foreign exchange reserves.
What's the secret? Control key resources (such as silver, machinery, oil) and trading networks (such as sailing ships, colonies). Today, what resources and networks can China use to build stablecoin hegemony?
China’s three killer moves: rare earths, the Belt and Road Initiative, and Hong Kong’s blockchain finance
We suggest that China can use three methods to promote RMB stablecoins and Hong Kong dollar stablecoins to challenge the hegemony of USD stablecoins. Each method seizes key resources or transaction networks:
Rare Earth Trading:
Key resources: According to a 2024 International Energy Agency (IEA) report, China controls 90% of global rare earth refining, supplying core materials for electric vehicles and AI chips, comparable to Spain's silver.
Why it works: Rare earths are the lifeblood of technology, and subsidized settlements attract buyers, driving up the use of stablecoins.
How to do it: If you use RMB stablecoin for settlement, you can provide a 0.5-1% discount. For example, when a Malaysian company buys rare earths with the RMB stablecoin, the transaction fee is only 0.1%, which is much lower than the 0.7% settled in US dollars. The Hong Kong dollar stablecoin assists in attracting buyers who are unwilling to use RMB.
One Belt One Road:
Trading network: By 2024, Belt and Road trade will reach $2.5 trillion, covering more than 140 countries, similar to Spain’s galleon network.
Why it works: Huge trade volumes provide application scenarios for stablecoins, and low-cost settlement increases circulation.
How to do it: Use RMB stablecoin to settle large projects. For example, Pakistan's "Belt and Road" port project uses RMB stablecoins to pay Chinese companies at a fee of 0.1%; Hong Kong dollar stablecoins serve small and medium-sized transactions of Hong Kong companies.
Hong Kong Blockchain Finance:
Transaction Network: According to the 2024 Hong Kong Monetary Authority report, Hong Kong, as the world's third largest financial center, handles 4% of cross-border payments. Its international network connects Asia, Europe and the United States, with a global influence similar to that of the Bank of London, and has the advantages of efficient settlement (instant payment) and high trust (linked exchange rate system).
Why it works: As the world's third largest financial center, Hong Kong has a huge number of transaction users and international networks, processing 4% of cross-border payments. If traditional financial products (such as bonds and trade financing) are introduced into the blockchain and preferential incentives are given to the use of Hong Kong dollar stablecoins for settlement, it can attract global users and significantly increase the use of Hong Kong dollar stablecoins.
Summary: These three strategies use rare earths (key resources) and the "Belt and Road" and Hong Kong financial networks (transaction networks) to jointly promote the RMB stablecoin and the Hong Kong dollar stablecoin, replicating the historical currency hegemony model.
How RMB and HKD Stablecoins Support China’s Strategy
How do the RMB stablecoin and the Hong Kong dollar stablecoin divide their responsibilities to support China’s three major strategies? Here are their roles and complementarities:
RMB Stablecoin: Driving Rare Earth and the Belt and Road Initiative:
Why use rare earths and the "Belt and Road Initiative"? : Backed by the Chinese economy (GDP of approximately US$18 trillion in 2024), it is suitable for large-scale trade settlement. A 0.5-1% discount promotes the internationalization of the RMB and reduces dependence on the US dollar (58% of foreign exchange reserves, [International Monetary Fund - Currency Composition]). Rare earths and the "Belt and Road Initiative" require strong economic support, and the RMB stablecoin is the most suitable.
For example: A Pakistani company used RMB stablecoin to pay for the "Belt and Road" railway, with a fee of 0.1%; a Malaysian company used RMB stablecoin to buy rare earths, saving 0.7% in US dollar settlement fees.
Limitations: The RMB accounts for 2.5% of foreign exchange reserves, and Europe and the United States are reluctant to use it due to political resistance.
Hong Kong dollar stablecoin: promoting Hong Kong blockchain finance:
Why use blockchain finance in Hong Kong? ：As the world's third largest financial center, Hong Kong has an extensive international transaction network and a 4% share of cross-border payments. Its linked exchange rate system (HKD/USD 7.75-7.85) ensures currency stability, and its independent judicial system enhances international trust. After stablecoin regulation is improved in 2025, the Hong Kong dollar stablecoin will be used to settle digital bonds and trade financing, with a transaction fee of only 0.3% and instant payment, which will attract global investors and companies.
For example: International investors use HKD stablecoins to buy Hong Kong digital bonds and enjoy stable returns without having to exchange for USDT; Hong Kong companies use HKD stablecoins to pay Southeast Asian suppliers with a transaction fee of only 0.3%.
Limitations: Hong Kong’s economy is small (GDP in 2024 is about US$400 billion), and the Hong Kong dollar is in small circulation (0.1% of foreign exchange reserves), making it unsuitable for large-scale trade.
Complementary relationship: Joining forces to subvert hegemony:
The RMB stablecoin focuses on rare earths and large-scale trade in the "Belt and Road Initiative", providing transaction scenarios; the Hong Kong dollar stablecoin promotes blockchain finance and attracts international financial users. Funds flow between the two, working together to expand their influence.
The Hong Kong dollar stablecoin avoids political resistance to the RMB by relying on Hong Kong's neutrality (independent judiciary), attracts European and American users, and indirectly supports the "Belt and Road" initiative and rare earth trade.
Summary: These two stablecoins help China reduce US transaction restrictions, reduce exchange costs, promote the internationalization of the RMB, and enhance financial autonomy and global influence through three major strategies.
Hong Kong's blockchain finance not only supports international settlements, but also opens up new opportunities for investors, which is worthy of attention for novices.
Investment potential of blockchain finance in Hong Kong
Hong Kong blockchain finance provides new opportunities for investors and is particularly attractive to novices. Hong Kong investors can pay attention to which traditional financial products the HKMA and financial institutions introduce into blockchain and seize potential opportunities. Here are three possible products we speculate:
- Digital bonds: issued by banks, with stable returns (about 3-5% annualized), settled in Hong Kong dollar stablecoin, and transaction fees of only 0.3%. For example, you can invest in digital bonds through a regular exchange and save on dollar conversion fees.
Trade Finance Tokens: Provide short-term financing for small and medium-sized enterprises, with high liquidity, moderate risk, and suitable for stable returns.
Real Estate Token (RWA): Split Hong Kong properties into digital assets, with a low threshold (starting from thousands of Hong Kong dollars) to participate in real estate appreciation.
How do these opportunities impact you? Newbies can start from the following directions to explore blockchain financial trends.
What can novice investors pay attention to?
This article is for information reference only and is not investment advice.
Try following these:
Hong Kong regulatory developments: New stablecoin laws in 2025 may bring new projects. Check the HKMA announcements ([Hong Kong Monetary Authority - Stablecoin Issuers]) or news.
China market trends: Rare earth concessions or the “One Belt, One Road” initiative may boost demand for stablecoins.
Hong Kong Blockchain Finance: Research digital bonds, trade finance tokens or real estate token projects on formal exchanges, and understand the application scenarios of Hong Kong dollar stablecoins.
Conclusion: The new king of digital currency?
China uses rare earths, the Belt and Road Initiative and Hong Kong blockchain finance to promote stable currencies of the RMB and Hong Kong dollars, challenging the 80% market hegemony of the US dollar! The RMB focuses on trade, while the Hong Kong dollar leads financial innovation, and together they will rewrite the future of currency. History teaches us: resources and networks determine victory or defeat. Will China be the new king? Novice investors, explore the stablecoin trend now and catch the digital wave! Who will dominate? Leave me a message, share with your friends, and debate together!
Opinion articles present diverse opinions and do not represent the position of (WEB3+)
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