Author | Aki Chen
Recently, a series of dynamics indicate that offshore RMB stablecoins are accelerating their arrival: According to Reuters, domestic tech giants JD.com and Ant Group have repeatedly lobbied the People's Bank of China to be the first to issue stablecoins denominated in offshore RMB (CNH) in Hong Kong. Compared to the previously conservative attitude towards cryptocurrencies, the Governor of the People's Bank of China, Pan Gongsheng, has also expressed an open attitude towards stablecoins, acknowledging that they can achieve 'payment equals settlement', significantly shortening the cross-border payment chain, while also emphasizing the enormous challenges posed to financial regulation. Previously, Guotai Junan International received approval from the Hong Kong Securities and Futures Commission to upgrade its virtual asset trading framework, leading to a surge in stock prices, which is also seen as a signal that the 'national team' is entering the crypto industry. Under the policy 'icebreaking', various market players are gearing up, and RMB stablecoins are moving from concept to practical implementation.
1. Event Review
According to First Financial, on May 21, the Hong Kong Legislative Council passed the (Stablecoin Regulation Draft) to establish a licensing system for fiat stablecoin issuers in Hong Kong; on May 30, the Hong Kong SAR government published the (Stablecoin Regulation) in the government gazette, meaning that the (Stablecoin Regulation) officially became law. Subsequently, two internet giants responded positively. On June 12, Ant Group announced that it would apply for stablecoin licenses in Hong Kong and Singapore, and also intends to seek permission in Luxembourg, mainly to strengthen its blockchain business and support its cross-border payment and capital management services. This involves two of its subsidiary companies, one headquartered in Singapore, Ant International, and another, Ant Digital Technologies, headquartered in Hong Kong. On June 17, JD.com also stated that it would issue a stablecoin pegged 1:1 to the HKD based on a public blockchain in Hong Kong, and after completing B-end payments, it plans to penetrate into C-end payments. Notably, on the same day, the U.S. Senate also passed a stablecoin (Genius Bill), seen as the first bill in the U.S. to establish a regulatory framework for 'stablecoins', filling a regulatory void in this area. Corresponding to corporate actions is the rapid advancement of Hong Kong regulators. The (Stablecoin Regulation) has been officially passed by the Legislative Council in late May this year and will take effect on August 1. According to the regulations, the HKMA will start accepting license applications. The stablecoin license is scarce, with expectations of only a handful being issued, yet over 40 companies are already preparing to apply, with law firms reporting dozens more interested, leading to fierce competition. Applicants are almost exclusively leading financial institutions and internet giants from China, including JD.com, Standard Chartered, Yuanbi, Ant International, and Ant Digital Technologies, while some small and medium enterprises face high barriers, making their chances of application slim, with some companies even engaging in concept hype to manipulate stock prices. The Secretary for Financial Services and the Treasury of Hong Kong, Xu Zhengyu, stated that the licensing system established by the new regulations will provide appropriate regulation for stablecoin-related activities, laying the foundation for the sustainable development of stablecoins in Hong Kong and the entire digital asset ecosystem. This initiative can be seen as a milestone in promoting Hong Kong's status as an international financial center.
2. Core Discussions and Expert Explanations
Misunderstandings and Definitions of Stablecoins
The prospects and positioning of offshore RMB stablecoins have sparked in-depth discussions among regulatory officials, financial scholars, and market participants. From a regulatory perspective, there is a consensus that stablecoins essentially remain a digital representation of fiat currency and should fall under the existing financial regulatory system. Wang Yongli, former Deputy Governor of the Bank of China, emphasized that stablecoins under regulation are essentially tokens of fiat currency, not independent currencies, and their development highlights the inefficiencies of existing fiat currency systems. Countries should learn from their technology to enhance the cross-border payment capabilities of fiat currencies. He pointed out that the U.S., Hong Kong, and others have recently accelerated stablecoin legislation, requiring licensed operations, 100% reserves, and prohibiting interest payments, which essentially strengthens the centralization attributes of stablecoins and weakens the risks of decentralization, bringing them closer to traditional financial regulatory domains. Here, Qiao Yide, Vice President and Secretary of the Shanghai Development Research Foundation, clarified the recent wave of stablecoins.
The first common misunderstanding is to liken stablecoins to 'blockchain versions of Alipay'. This statement is fundamentally inaccurate. Alipay is a third-party payment platform that does not possess currency attributes; the funds it transmits in transactions are still stored in users' bank accounts. Stablecoins, on the other hand, inherently possess value-carrying functions, even though their main use is also payment. In transactions, stablecoins directly represent users' assets rather than merely serving as a 'channel' for funds.
The second misunderstanding is to compare the Hong Kong dollar to a 'USD stablecoin'. On the surface, there is some similarity in their anchoring mechanisms — the issuance of the Hong Kong dollar is fully backed by USD. However, from the perspectives of legal attributes and governance structure, there are fundamental differences between the two. The Hong Kong dollar is the legal tender of Hong Kong, regulated by the Monetary Authority through a linked exchange rate system, with the issuance rights held by the three major note-issuing banks: HSBC, Bank of China, and Standard Chartered. The profits from note issuance go to the Hong Kong Exchange Fund, serving the public interest. In contrast, USD stablecoins, represented by USDT, are issued primarily by private companies, with the income from reserve assets being privately owned. For example, Tether's profits surpassed $10 billion in 2023, and its governance and public nature show clear differences.
The third misunderstanding is to think that stablecoins are 'decentralized'. In reality, stablecoins are a highly hybrid structure; their underlying characteristics still exhibit significant centralization. Their linkage to fiat currencies means the issuance mechanism relies on centralized entities to manage reserves and redemptions; at the same time, the custody arrangements and auditing mechanisms of stablecoins are also mostly controlled by centralized institutions. In contrast, their trading and circulation aspects reflect more decentralized features on-chain. Therefore, stablecoins are neither completely centralized nor fully decentralized; a more accurate description is that they are 'credit intermediaries' empowered by technology.
In general, stablecoins are essentially a blockchain representation of fiat currency, a digital expression of credit. They use blockchain technology to connect the virtual and real worlds, undertaking functions such as payment and settlement, and have a strong transitional nature. From the perspective of financial development history, the popularity of stablecoins is, to some extent, a response to the inability of decentralized currencies like Bitcoin to fulfill daily currency functions—decentralized ideals encounter practical implementation dilemmas, leading the market to 'return' to traditional currency systems. This phenomenon precisely confirms that fiat currencies still possess strong vitality and stability within the current financial system.
Beijing Explores Stablecoins and the Internationalization of the RMB Through Hong Kong
For China, offshore RMB stablecoins are expected to drive the internationalization of the RMB. Morgan Stanley's latest research report points out that as the U.S. advances stablecoin legislation, it may further consolidate the USD's dominant position in the global financial system. In this context, Beijing's focus on stablecoins has significantly increased, and it is leveraging Hong Kong as a 'regulatory sandbox' to explore its feasibility as a future alternative payment tool while promoting the cross-border use of the RMB.
Former Governor of the People's Bank of China Zhou Xiaochuan recently mentioned stablecoin issues in public, pointing out that the widespread use of USD stablecoins may exacerbate global 'dollarization', which deserves high vigilance. Morgan Stanley agrees and further points out that the rise of stablecoins does not mean that the international monetary system will usher in a new stage of 'supranational currency'. They emphasize that the essence of stablecoins remains an extension of traditional fiat currencies within the existing regulatory framework, and their core role is to enhance the efficiency of cross-border payments and transactions, rather than to replace existing sovereign currencies. Li Yang, Chairman of the National Finance and Development Laboratory, also agrees with this viewpoint and adds that China should take proactive steps in the field of stablecoins, advancing the internationalization of the digital RMB (e-CNY) and utilizing Hong Kong to develop RMB stablecoins to enhance the RMB's international status. He emphasizes that as long as sovereign states exist, the sovereign attributes of currency will not change. Currency sovereignty is an important part of national sovereignty, representing each country's highest authority to issue and manage its currency domestically. Regardless of how its technological path evolves, stablecoins cannot bypass the exchange regulations and capital flow restrictions between different currencies in international payments.
When discussing the development path of RMB stablecoins, Morgan Stanley notes that they should be viewed as a potential component of the cross-border RMB settlement system, expected to synergize with existing financial infrastructure, including RMB swap agreements, CIPS (Cross-border Interbank Payment System for RMB), and the global RMB clearing service network. Morgan Stanley's report indicates that the internationalization of the RMB has shown a significant retreat over the past three years. The share of the RMB in the global reserve currency system has declined from 2.8% at the beginning of 2022 to 2.2% by the end of 2024. The bank believes this trend reflects a weakening of international market confidence in China's economic prospects, which has also weakened capital liquidity. The main reasons for the setbacks in the internationalization of the RMB are the ongoing concerns about the 'threefold challenges' facing China—high leverage debt, deflationary pressures, and demographic changes. These structural issues weaken the attractiveness of RMB assets in the market and to some extent limit the RMB's further expansion in international transactions and reserves.
The Dual-Track Parallel Model of RMB Stablecoins
Li Yang specifically mentioned that the United States is actively promoting stablecoin legislation aimed at serving the national interests of the USD: including modernizing the USD payment system, consolidating the USD's international dominance, and creating trillions of dollars in new demand for U.S. Treasury securities, as the recently passed stablecoin bill requires full backing with USD or U.S. Treasuries. This means that stablecoin issuers must either hold USD in bank accounts or purchase U.S. Treasuries directly. However, under the current financial system arrangements, non-U.S. government entities (such as stablecoin companies) typically do not earn interest on U.S. Treasuries. From this perspective, stablecoins provide a new mechanism for 'interest-free resolution' for U.S. Treasuries: if the stablecoin market continues to expand, issuers will continue to increase their holdings of U.S. Treasuries as reserves, further raising the market demand for U.S. Treasuries without requiring the government to pay extra interest costs, forming a sort of 'silent resolution'. Of course, the actual situation is often more complex and severe. On the one hand, the total amount of U.S. Treasuries is huge, and even if stablecoins grow rapidly, it will still be difficult to shake their overall stock in the short term; on the other hand, the issuance of stablecoins is still subject to multiple restrictions, including compliance, demand, and macro policies.
The stablecoin mechanism cleverly transforms the expansion of the crypto market into an extension of USD influence on the blockchain. Therefore, he calls for China to quickly formulate countermeasures to achieve breakthroughs through a 'dual-track approach': on one hand, accelerate the construction of the central bank's digital RMB transaction settlement system, and on the other hand, actively explore the development of RMB stablecoins in the offshore system, making both work synergistically. This 'dual-track' approach has also received resonance from multiple experts. Qiao Yide, Vice President of the Shanghai Development Research Foundation, believes that in the face of the stablecoin wave, China needs to differentiate between short-term and long-term, domestic and overseas strategies: in the short term, it can first break through in the offshore market, relying on Hong Kong as an international financial center to pilot the issuance of RMB stablecoins; once conditions mature, reassess whether and how to promote them domestically. He emphasizes that RMB stablecoins should focus on specific functions such as cross-border payments, for example, bypassing SWIFT for cross-border settlements and regional cooperation scenarios like the Mainland-Hong Kong 'Payment Link', to leverage advantages in these areas, coordinating with the central bank's digital RMB to form a 'dual-track' alignment domestically and internationally, working together to promote the internationalization of the RMB.
In terms of stablecoin model design, industry scholars and practitioners have also provided constructive ideas. Xiao Feng, Chairman of HashKey Group, suggested constructing a 'dual-layer architecture' for central bank digital currency (CBDC) and RMB stablecoins. The specific approach is to allow licensed stablecoin issuers to open digital RMB reserve accounts at the central bank and use CBDC as wholesale funding, issuing RMB stablecoins for retail and cross-border purposes in the form of on-chain tokens. This design combines the central bank's R&D achievements in digital RMB with the innovative capabilities of market institutions, allowing the central bank digital currency to assume wholesale functions while stablecoins are used for cross-border and retail payments, thereby greatly accelerating the RMB's cross-border circulation and internationalization process. In Xiao Feng's view, stablecoins truly solve the 'last mile' problem in inclusive finance, with their core value being the enhancement of accessibility to financial services. Mainstream stablecoins, represented by USDC (USD Coin) and USDT (Tether), are expanding the boundaries of traditional financial systems, providing efficient and low-threshold payment and settlement means for those who cannot easily access banking systems. He believes that stablecoins and tokenization technologies will profoundly change the operational logic of global financial markets: 'Ten years from now, stablecoins will drive tokenization to become the mainstream payment and settlement tool, ultimately replacing traditional financial infrastructure. The trend of 'good money driving out bad money' is irreversible, as stablecoins are more efficient, lower in cost, more streamlined, and support 7x24 hour transactions.'
Therefore, Xiao Feng stated: 'As China's international financial center, Hong Kong must keep pace with or even lead the trend of stablecoin development. The launch of the (stablecoin regulation) by Hong Kong, which is the first in the world to complete the stablecoin legislative process ahead of the United States, marks a significant step in the global construction of stablecoin systems. This regulation is not only of great positive significance for Hong Kong's local fintech ecosystem, but is also seen as an important boost for promoting the internationalization of the RMB. In this process, Hong Kong can act as a 'testing ground' for China's stablecoin development, accumulating experience in institutional design, market operation, and risk prevention through a trial approach, identifying problems in a timely manner, improving mechanisms, and laying a policy and practical foundation for wider promotion of stablecoins in the mainland in the future. After the pilot of stablecoins in Hong Kong matures, consideration can be given to connecting offshore RMB stablecoins in specific areas of the mainland, such as the Hainan Free Trade Port, the Guangdong-Hong Kong-Macao Greater Bay Area, and the Shanghai Free Trade Port, through free trade accounts (FT).
3. Hong Kong's Regulatory Attitude: Regulation Details and Licensing System
As the preferred testing ground for offshore RMB stablecoins, Hong Kong's regulatory system design and implementation progress are highly anticipated. The stablecoin regulation combines a 'licensing system + sandbox testing' approach, establishing a high-threshold entry and ongoing regulatory framework for stablecoin issuance and related activities. After the regulation was passed, the Hong Kong Monetary Authority (HKMA) launched the 'Stablecoin Issuer Sandbox' program in March this year, inviting interested institutions to conduct pilot projects under regulatory guidance, allowing regulators to convey expectations and collect industry feedback to prepare for formal implementation. This sandbox mechanism demonstrates the pragmatic side of Hong Kong's regulation: testing in advance before legislation is completed, strengthening communication with the market to ensure smoother and more feasible implementation of new regulations. According to the regulations and accompanying guidelines, any stablecoin issuer or related activity anchored to a legal currency carried out in Hong Kong must obtain a license issued by the HKMA. The regulatory scope covers stablecoin issuance, management, and proactive promotion, and licensed institutions must strictly comply with various requirements, including but not limited to:
1. Sufficient Reserves and Asset Security: Stablecoins in circulation must be fully backed by equal-value, highly liquid assets. Reserve assets must be consistent with the pegged currency (special cases require approval), which can include cash, bank deposits, and other low-risk assets, and must be stored separately from the issuer's own funds through structures like trusts to protect the rights of holders. Issuers should establish a complete reserve management and risk control mechanism, with independent audits verifying reserve adequacy monthly and publicly disclosing information about reserve size and composition.
2. Stability Mechanism and Redemption: Issuers are responsible for maintaining the value stability and must establish effective mechanisms to ensure the lasting reliability of the stablecoin's pegged exchange rate. Holders have the right to redeem stablecoins at the pegged price, and under normal circumstances, redemptions should be completed within T+0 to T+1 days, without imposing excessively high fees or unreasonable conditions. This provision guarantees users' liquidity expectations for stablecoins, preventing runs and liquidity risks.
3. Business Scope Limitations: If stablecoin issuers wish to expand into new businesses, they must obtain prior approval from the Monetary Authority and demonstrate sufficient resources and that the new business will not pose significant risks to their stablecoin issuance responsibilities. This measure is to prevent issuers from jeopardizing the stable operation of stablecoins by venturing into high-risk businesses.
4. Local Entities and Governance: Applicants must be entities registered in Hong Kong and have a physical office in Hong Kong. The main management team (such as the CEO, executives, and directors) should be resident in Hong Kong for direct supervision by regulatory authorities. Additionally, issuers must meet minimum capital requirements, proposed to be not less than HKD 25 million or 1% of the circulating value of the stablecoins (whichever is higher). The executive team should possess sufficient knowledge and experience in relevant fields, and any changes in control or management must be approved by regulators in advance.
5. Anti-Money Laundering and Cross-Border Compliance: The President of the HKMA, Yu Weiwen, emphasized that the anonymity and cross-border circulation characteristics of stablecoins pose risks and challenges such as money laundering and terrorist financing, requiring issuers to have sufficient capabilities in anti-money laundering (KYC/AML). If stablecoin operations involve other jurisdictions, the applicant must develop a comprehensive cross-border compliance plan to ensure that they and their partners hold the necessary licenses and comply with local laws in relevant areas. In the future, Hong Kong will also strengthen cross-border regulatory cooperation through international platforms such as the G20 Financial Stability Board to promote the healthy and orderly development of stablecoin activities globally.
Hong Kong regulators are acutely aware that stablecoins are both an innovation opportunity and a potential risk. Legislative Council member Wu Jiezhuang has sought to 'cool' the market, emphasizing that stablecoins are not speculative tools, but a payment method based on blockchain technology that does not have appreciation potential in itself. As an international financial center that has formulated regulatory systems for stablecoins relatively early, Hong Kong hopes to reserve developmental space for emerging business models while preventing financial risks, aiming to establish Hong Kong as a 'global model' for the compliance of stablecoins and assist in the digital cross-border use of fiat currencies like the RMB; at the same time, it must closely monitor potential risks to ensure that 'once problems arise, the regulatory and legal frameworks can function'.
Currently, all parties in Hong Kong are showing an unprecedented mix of enthusiasm and rationality towards stablecoins: the government has publicly expressed support for the development of compliant stablecoins in Hong Kong through policy declarations and encourages the public and private sectors to jointly explore the feasibility of using licensed stablecoins in government payments, cross-border trade, and other scenarios; the Legislative Council is closely following the implementation details of the regulation to ensure the smooth passage of the two accompanying announcements (including the definition of professional investors, etc.); the Hong Kong financial sector also sees this as a new opportunity to consolidate Hong Kong's status as an international financial center.
4. Challenges to USD Hegemony: What are the Chances for RMB Stablecoins?
The emergence of offshore RMB stablecoins inevitably faces the grand proposition of 'challenging the USD hegemony'. The USD has long monopolized the core position of the global financial and payment systems, and this is true even in the crypto world: currently, nearly all of the top ten stablecoins are pegged to the USD, with a total scale of about $258 billion, effectively making the USD the default settlement layer in the digital asset arena. The RMB's share in traditional cross-border payments is less than 3%. Can the emerging RMB stablecoin shake this pattern? Industry comparisons have unfolded from perspectives such as payment efficiency, institutional credibility, compliance, and cross-border cooperation.
Payment Efficiency
There are pain points in cross-border payment, with traditional wire transfers being long, costly, and slow. Stablecoin technology is expected to greatly improve this situation. Xiao Feng commented that stablecoins enhance payment and settlement efficiency by several times, significantly reduce costs, and minimize intermediary steps. If a technology can reduce costs to one-fifth of the original and increase speed fivefold, it will undoubtedly have enormous vitality. However, it is important to note that before the bill is enacted, stablecoin payments have not been incorporated into KYC and anti-money laundering regulations. Although using stablecoins for cross-border payments is technically efficient, this difference stems to some extent from regulatory disparities; as regulations normalize, the compliance costs of stablecoins may also rise. This makes it difficult for RMB stablecoins to use payment efficiency as a revolutionary point to overtake the USD's dominant position.
Institutional Credibility
This dimension involves two layers of meaning: one is the credit of the pegged currency itself, and the other is the transparency and credibility of the stablecoin issuance arrangements. From the perspective of the pegged currency, the USD, leveraging the strength of the U.S. economy and financial system, is long regarded by global investors and official institutions as the most reliable store of value and pricing currency. 'USD = Credit' is deeply rooted internationally. Although offshore RMB is gradually expanding its usage, it is limited by China's capital account controls and the RMB's limited international acceptance, resulting in a relatively weaker global credit image compared to the USD. This means that a stablecoin pegged to the RMB must win the trust of international users similarly to USD stablecoins (such as USDT, USDC) by providing sufficient confidence support in terms of macro policy stability, RMB value stability, and convertibility. As the market worries, doubts faced by RMB stablecoins include: Is the convertibility of offshore RMB (CNH) smooth enough? Are there unpredictable risks in the RMB exchange rate and policies? These directly affect overseas users' willingness to hold and use RMB stablecoins. Hong Kong's regulatory framework is meticulously designed for the trust mechanism of stablecoins: mandatory information disclosure, independent audits, and qualified asset custody will ensure high levels of transparency in the reserves and security of funds for RMB stablecoins. In contrast, the currently dominant USD stablecoins (like USDT) faced early criticisms for their lack of transparency in reserves and high proportions of commercial paper. If RMB stablecoins strictly adhere to Hong Kong regulations for 100% cash-equivalent backing and regularly publish audit results, they may even outperform some USD stablecoins in reserve reliability, thereby enhancing market confidence. Overall, while RMB stablecoins face a long road to challenge USD hegemony in terms of credibility, rigorous regulation and transparent mechanism design can at least narrow the 'trust deficit' gap with USD stablecoins.
Compliance and Global Cooperation
The USD hegemony is reflected not only in the currency itself but also in the U.S.'s authority to create and enforce global financial rules. The expansion of USD stablecoins also relies on the radiation of the U.S. financial system—large amounts of USD stablecoin reserves are directed towards U.S. Treasuries, providing additional demand support for U.S. Treasuries. Against this backdrop, the launch of RMB stablecoins is, to some extent, 'starting anew' outside the existing international financial framework, requiring compliance and legal recognition from regulators worldwide to be widely used. In this regard, Hong Kong provides a viable path: as Hong Kong's licenses have an international stepping stone nature, if RMB stablecoin issuers granted licenses can establish credible records in Hong Kong, they can seek corresponding licenses in Singapore, Europe, and other places, gradually integrating into local compliance systems, which will greatly enhance the legitimacy of cross-border circulation of RMB stablecoins. In the future, it is not ruled out that stablecoins licensed in Hong Kong may receive mutual recognition or exemption treatment in friendly jurisdictions, which will help RMB stablecoins 'go out'. In contrast, USD stablecoins currently remain outside regulation in many countries/regions (some regarded as illegal, others lacking clear rules), which is both a risk and an opportunity: markets outside the U.S. may hold an open attitude towards RMB stablecoins regulated by Hong Kong, at least not more conservative than how they treat U.S. unregulated stablecoins. Therefore, in terms of global cooperation and compliance, as long as RMB stablecoins can firmly hold their base in Hong Kong and seek support from regional financial centers (such as Singapore, Dubai, etc.), there is an opportunity to build a cross-border compliance network that coexists with USD stablecoins, thereby eating into part of the USD's trading share.
Network Effects and User Base
The competition of currencies ultimately boils down to the competition of network effects. The reason the USD dominates is that, whether in traditional trade, investment pricing, or emerging digital transactions, everyone is using USD; the larger the network, the stronger the advantage. USD stablecoins follow this trend, dominating the global crypto market and forming a huge liquidity network. For example, USDT circulates widely in global exchanges and over-the-counter markets, and merchants and individuals are accustomed to using it as a medium of value. The RMB stablecoin started late and is inherently in a weak network position; to challenge the USD, it must rapidly expand its own network. On the one hand, China has the largest trade volume and supply chain system in the world, and many emerging markets have close trade ties with China. If the RMB stablecoin can take the lead in promoting in areas such as cross-border e-commerce and supply chain finance, it will quickly accumulate real transaction demand and user groups. Xiao Feng pointed out that many small and micro cross-border businesses in China will be among the biggest beneficiaries of the RMB stablecoin—previously, they faced significant challenges in cross-border payment and settlement, while stablecoins greatly facilitated this process. Currently, many residents in emerging markets have already used USDT to hedge against currency depreciation and capital controls, thereby expanding the influence of the USD in these regions. If a compliant RMB stablecoin enters the market in the future and obtains local regulatory approval, then the RMB may also penetrate these markets in digital form, competing for the territory of the USD. Of course, establishing network effects is not an overnight task. For the RMB stablecoin to win user preference, it must not only provide stable and reliable value and low-cost, high-efficiency payment experiences but also create convenient usage interfaces and a wide range of acceptance scenarios—such as wallet support, merchant acceptance, and exchange channels. USD stablecoins have already been seamlessly supported by global crypto wallets and trading platforms, while RMB stablecoins still need ecosystem development in this regard. However, once regulations clear compliance barriers, market forces will push various wallets and exchanges to quickly integrate RMB stablecoins, as for businesses, adding a sovereign stablecoin means a potential user base in a huge market.
In summary, RMB stablecoins are unlikely to shake USD hegemony in the short term, but the launch of offshore RMB stablecoins has already placed a key piece on the digital financial chessboard. In the long run, the ability of RMB stablecoins to challenge the USD will depend on China's own pace of financial opening and the international community's confidence in the RMB. Nonetheless, in this new battlefield of stablecoins, the competition around currency dominance between China and the U.S. has already begun.
Five, Other Potential Challenges for RMB Stablecoins
Market Trust
For any currency to be widely adopted, trust is the cornerstone. The hegemony of the USD is undoubtedly supported by political and military factors, but more directly, it stems from global users' confidence in the USD's payment and liquidity. For the RMB stablecoin to earn similar trust, it needs to build credit endorsement on multiple levels. First, policy credibility. Market concerns about 'political risk' include: Will there be sudden restrictions on RMB stablecoins due to geopolitical or regulatory shifts? For instance, if China-U.S. relations tense in the future, could the Chinese government restrict the exchange of offshore RMB stablecoins for USD or require the review of specific transactions? These questions may leave some international users wary. In this regard, Chinese regulators should maintain policy transparency and consistency, clearly conveying the regulatory boundaries and supportive stance towards RMB stablecoins to eliminate unnecessary suspicions. Second, operational credibility. Stablecoin issuers need to establish a reputation; for instance, custodial banks should choose internationally reputable banks, and auditing should involve globally recognized auditing firms to enhance trust among international investors. Hong Kong's initial plan to issue licenses to a few capable licensed institutions is based on this consideration: selecting the best to create a benchmark.
The Impact of the International Political Environment
As an innovation aimed at challenging USD dominance, RMB stablecoins are inevitably influenced by international games. It is foreseeable that the U.S. may hold reservations about them. Once RMB stablecoins begin to占据 a certain share in global capital flows, the U.S. may resort to various means to suppress them, such as: requiring U.S. companies and financial institutions not to participate in RMB stablecoin networks, lobbying its allies to refuse RMB stablecoin payments, or even pressuring SWIFT and other traditional networks not to cooperate with related offshore RMB clearing banks. This is not alarmist — in the past, the U.S. has sanctioned banks in countries such as Iran, removing them from SWIFT, and it cannot be ruled out that digital currencies will also be included in the sanctions toolbox in the future.
In summary, offshore RMB stablecoins carry the new dream of RMB internationalization but also face complex realities. From domestic financial security to international currency competition, from technical security to user cultivation, every step must be taken steadily and methodically. The emergence of RMB stablecoins does not mean an overnight challenge to USD hegemony but rather marks the beginning of a protracted battle—in the vast space of the digital economy and emerging markets, the RMB will strive for greater usage and recognition through stablecoins as a new vehicle. In the coming years, while we may not see the USD's position being replaced, we might witness the gradual rewriting of the dominance of the USD alone: multiple fiat stablecoins such as the USD, EUR, and RMB coexisting and competing, leading the global monetary system towards a more diversified and balanced direction.
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