In the summer of 2025, a global financial competition surrounding stablecoins is rapidly intensifying at an unimaginable pace. As the US Senate historically passes the (GENIUS Act), paving the way for the compliance of dollar stablecoins and triggering a stock price surge for issuers like Circle, a strong shockwave crosses the Pacific, sparking profound reflection and anxiety from top to bottom in China, which had previously imposed the strictest bans on cryptocurrencies.
From the first public mention by the governor of the People's Bank of China, to the former governor's warning about 'dollarization', and to corporate giants JD.com and Ant Group's high-profile announcement of applying for stablecoin licenses, a major debate on 'how to respond to the impact of dollar stablecoins' is rapidly unfolding in China's political, business, and academic circles. This is not just a discussion about technical routes, but also a strategic shift concerning future monetary sovereignty and global financial discourse power. In this global competition that has already begun, who will break through first?
The US's 'sunny strategy'
The storm was ignited by the US (GENIUS Act). The passage of this act means far more than bringing regulatory certainty to the crypto industry. For China's policymakers and analysts, it is a carefully designed 'sunny strategy', with the core goal of using the emerging tool of stablecoins to seamlessly extend the dollar's hegemony from the traditional financial system into the vast realm of the digital economy.
Morgan Stanley's analysis points out that stablecoins are not a completely new currency, but rather a 'new distribution channel' for existing sovereign currencies. Currently, the total market value of global stablecoins has exceeded $260 billion, with as much as 97% linked to the US dollar. This means that every cross-border payment, transaction, and settlement involving stablecoins essentially expands the influence of the dollar and indirectly increases the demand for US Treasury bonds.
The report from China International Capital Corporation (CICC) also expresses similar concerns, arguing that this will further consolidate the dollar's global position. For China, which is striving to promote the internationalization of the renminbi, falling behind in the competition for digital infrastructure such as stablecoins undoubtedly poses a significant risk of being marginalized.
The Eastern Shift
In the face of the US's relentless pressure, signs of loosening the long-standing 'iron curtain' of cryptocurrency bans are beginning to emerge within China. A series of statements from high levels indicate a subtle shift in policy direction:
Rare remarks from the central bank's senior officials: In June 2025, Pan Gongsheng, governor of the People's Bank of China, publicly mentioned stablecoins for the first time at the Lujiazui Forum, acknowledging their potential in reshaping traditional payment systems and shortening cross-border payment chains. He specifically pointed out that emerging technologies can help address the risks of traditional payment systems being 'politicized' and 'weaponized,' which is interpreted as a subtle response to US financial sanctions. Former governor Zhou Xiaochuan directly warned that dollar stablecoins could accelerate the global process of 'dollarization', and China must respond early.
Corporate giants spring into action: The business community is responding more swiftly. E-commerce giant JD.com and Ant Group, Alibaba's fintech behemoth, recently proposed in a private meeting with China's central bank to authorize the issuance of a stablecoin based on offshore renminbi in Hong Kong. They argue that this will help enhance the role of the renminbi in global trade and reduce the dominance of the US dollar. It is reported that regulatory authorities have responded positively to this proposal.
A collective call from academia and think tanks: Numerous top scholars and national think tanks, including former Vice President of the Chinese Academy of Social Sciences Li Yang and Professor Deng Jianpeng from the Central Political and Legal Affairs University, have published articles urging China to adjust its policies on crypto assets, advocating for active participation in rule-making while maintaining the bottom line of financial security to avoid missing the opportunity of the technological revolution.
A clear consensus is forming: In the face of the stablecoin wave, China can no longer stand by. If lobbying efforts succeed, it would mark a significant policy shift for China since the cryptocurrency ban in 2021 and could hint at a broader strategy to enhance the international influence of the renminbi through digital finance.
However, considering the strict capital controls on the mainland and the high emphasis on financial stability, it is clearly impractical to directly open up stablecoins domestically. Thus, Hong Kong's unique position becomes prominent—serving both as a 'firewall' against risks and a 'testing ground' for exploring innovations.
The Hong Kong Monetary Authority has announced that the stablecoin regulations will officially take effect on August 1, 2025, and will begin accepting license applications from issuers, making it the world's first financial center to provide a clear licensing mechanism for stablecoins. Notably, Hong Kong's regulatory framework applies not only to Hong Kong dollar stablecoins but also reserves space for issuing stablecoins linked to other fiat currencies, including offshore renminbi.
In this regard, international investment banks like Morgan Stanley generally believe that China may utilize Hong Kong as a pilot for offshore renminbi stablecoins. The brilliance of this strategy lies in:
Risk isolation: Relying on Hong Kong's independent financial system, stablecoin issuance and application testing can be conducted without impacting mainland capital controls and financial stability.
Utilizing existing advantages: Hong Kong boasts the world's largest offshore renminbi funding pool (approximately 1 trillion renminbi), providing a solid liquidity foundation for issuing offshore renminbi stablecoins.
Exploring new paths for renminbi internationalization: By issuing offshore renminbi stablecoins in Hong Kong, a new cross-border payment path that bypasses the traditional SWIFT system and is more efficient and cost-effective can be explored, providing new momentum for the internationalization of the renminbi.
Who can break through in the global competition?
Although China's policy direction is shifting, truly catching up or breaking through still faces numerous challenges. First, dollar stablecoins have significant first-mover advantages and network effects, making it extremely difficult for renminbi stablecoins to compete directly in the short term. Second, as Morgan Stanley pointed out, the fundamental obstacle to the internationalization of the renminbi is not merely the lag in payment infrastructure, but rather confidence in the growth potential of the Chinese economy and strict capital controls.
Therefore, China's strategy is more likely to be an asymmetric and gradual approach. Liu Xiaochun, vice president of the Shanghai New Financial Research Institute, suggests that the primary goal of renminbi stablecoins should not be to compete directly with dollar stablecoins, but to serve the development of emerging economies, expanding the use cases of the renminbi in a more 'organic' manner.
In summary, globally, stablecoins are undergoing a dramatic transformation from 'grassroots expansion' to 'institutional dominance'. Major economies such as the United States, the European Union, Hong Kong, and South Korea are incorporating them into regulatory frameworks, marking that stablecoins are no longer marginal products of the crypto world but are seen as an important component of future financial infrastructure.
China's shift from a strict ban to starting to 'urge' exploration is essentially a strategic reassessment driven by external pressures. The global competition triggered by dollar stablecoins is not about cryptocurrencies themselves, but rather a struggle for monetary sovereignty in the digital age.
Although challenges lie ahead, China has already realized that the cost of being absent in this unavoidable competition will be unbearable. Utilizing Hong Kong as a strategic foothold to explore offshore renminbi stablecoins may be a key step for China in this grand chess game. The final outcome of this competition will not only reshape the global stablecoin market landscape but will profoundly affect the international financial order for decades to come.