Circle's stock price surged 1.6 times on its first day of trading on the New York Stock Exchange, putting stablecoins in the spotlight; this triggered Chinese state media to question the 'stability' behind the hidden risks of U.S. Treasury bonds, warning that the bubble could burst quickly. (Background: JD.com joins the global stablecoin race: from sandbox to license competition) (Further background: Hong Kong (Stablecoin Regulation) Complete Interpretation: From definition, regulatory framework, application qualifications to market impact) The U.S. stablecoin company Circle saw its stock price soar over 1.6 times on its IPO day in New York, igniting discussions about stablecoins, while Chinese state media warned that excessive reliance on U.S. Treasury bonds could create systemic risks. Today (19th), the Chinese state media Economic Daily published a special article mentioning that stablecoins have become a prominent topic in Western markets, providing data examples: The market capitalization surged to $10 billion, and then what? The market leader is Tether (USDT), which holds over 60% market share; Circle's USDC accounts for about 24%. By the end of May 2025, the total market capitalization of stablecoins is expected to be around $250 billion, a 1,100% increase over five years. Circle's successful IPO is seen as an important milestone for the integration of crypto assets into mainstream finance and has also driven related stocks to rise. Stablecoins combine the programmable features of blockchain with the stability of fiat currencies, facilitating cross-border settlement and high-frequency trading, and can bypass some traditional intermediaries. For areas with severe inflation or capital controls, stablecoins provide low-threshold dollar assets. Interest-bearing products are even more attractive to yield-seeking institutions, with related market capitalization soaring to $11.4 billion, a year-on-year increase of 235%. Warning about reliance on U.S. Treasury bonds: Stablecoins are not stable. The state media article mentioned that mainstream stablecoins reserve a large amount in short-term U.S. Treasury bonds, which are highly correlated with the U.S. Treasury market. Once interest rates fluctuate dramatically or confidence declines, it could trigger a redemption wave, causing decoupling. HashKey Group's chief analyst Ding Zhaofei reminded: "The foundation of stablecoins lies in the safety, controllability, and transparency of reserve assets." Yu Jianing, co-chairman of the Blockchain Committee of the China Communications Industry Association, also stated that excessive concentration could bring new systemic risks. Global regulatory frameworks are not yet unified, and issues such as smart contract attacks and market concentration present variables for the future. Circle's listing symbolizes the move of stablecoins toward the mainstream, but if core challenges such as reserve concentration and fragmented regulation are not addressed, the term 'stable' may just be a bubble disguise. The U.S. Treasury crisis may lead to decoupling. Experts also warn that the U.S. Treasury crisis could escalate into other situations, and when reserves are insufficient or large-scale redemptions occur, stablecoins may face decoupling risks. A global regulatory framework for stablecoins has not yet been fully established, making it easy for regulatory arbitrage and other risk issues to arise. Currently, mainstream stablecoins mainly reserve assets in short-term U.S. Treasury bonds, tightly linking them to fluctuations in the U.S. Treasury market. If the U.S. Treasury market experiences volatility, policy interest rates are significantly adjusted, or market confidence declines, there may be payment pressure. There are still significant differences among different stablecoin issuers in terms of transparency, reserve mechanisms, audit quality, and asset custody methods, making risk exposure distribution difficult to measure uniformly, increasing uncertainty. In summary, here in China, listed companies are issuing regulated stablecoins through Hong Kong that prioritize supervision and are closer to CDBC pathways. This contrasts sharply with the issuance of tokens by private companies in the U.S., and during the Sino-U.S. competition, the stablecoin route and the future competition between the dollar, yuan, and Hong Kong dollar have become part of the monetary hegemony struggle between the East and West.

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