Stablecoins: Definition, Regulation, and Global Competition

1. Core Definitions and Classifications

Stablecoins are cryptocurrencies that are pegged to fiat currencies, commodities, or adjusted by algorithms to maintain price stability, categorized into three types:

  • Fiat-backed (accounting for 92.4% market share): such as USDT, USDC, 1:1 pegging to fiat or highly liquid assets (e.g., government bonds), the most mainstream.

  • Crypto-backed: such as DAI, over-collateralized cryptocurrencies (collateralization rate around 150%), relying on on-chain liquidation mechanisms.

  • Algorithmic Stablecoins: No physical collateral, relying on algorithms to adjust supply and demand (e.g., the now-collapsed UST), high risk, and often excluded from regulation.

2. Core Features and Applications

  • Price Stability: Low volatility, possessing both store of value and medium of exchange attributes.

  • Bridge Role: Connects traditional finance with DeFi, serving as the core medium for scenarios like lending and derivatives.

  • Efficient Payment: Cross-border transfers arrive in real-time, with costs much lower than SWIFT, becoming a safe-haven tool in high-inflation countries (such as Argentina, Turkey, etc.).

3. Regulatory Motivations and Global Progress

  • Motivation: The market value of stablecoins reached $260.7 billion (surpassing MasterCard), with over 170 million users, necessitating the prevention of systemic risks, maintenance of monetary sovereignty, and combating illegal capital flows.

  • Main Regulatory Framework:

    • USA: (Genius Act) establishes dual-track federal + state regulation, requiring issuers to be banks or similar institutions, with reserve assets limited to US Treasuries or cash, prohibiting interest and leveraged operations; (Clarity Act) clarifies regulatory divisions.

    • Hong Kong: (Stablecoin Regulation) requires fiat-backed stablecoins to obtain licenses, 100% liquid asset reserves, minimum capital of 25 million HKD, and prohibits circulation of crypto-backed stablecoins.

    • Commonality: Focus on collateralized types, excluding high-risk algorithmic stablecoins, enhancing reserve transparency and anti-money laundering scrutiny.

4. Competition in the Global Financial Order

  • Dollar Dominance: US dollar stablecoins account for 90% of market value, with 60%-80% of reserve assets being US Treasuries, forming a 'stablecoin - US Treasury' binding, solidifying dollar hegemony, leading to 'on-chain dollarization' in emerging markets (e.g., Argentina using USDT as a safe haven).

  • Multipolar Game: Countries promote local currency stablecoins (euro, HKD, etc.), competing for digital financial infrastructure and pricing power to hedge against dollar influence.

5. Risks and Challenges

  • Systemic Risk: Volatility of collateral may trigger de-pegging (e.g., USDC fell 12% in one day due to the collapse of Silicon Valley Bank in 2023).

  • Centralization Contradiction: Mainstream stablecoins rely on centralized institutions, conflicting with the blockchain's 'decentralization' principle.

  • Regulation and Sanctions: Cross-border regulatory coordination is difficult, and US dollar stablecoins may become tools for US financial sanctions.

Conclusion

Stablecoins are the core infrastructure of digital finance, promoting innovation in payment efficiency while intensifying global monetary sovereignty competition. Future development needs to balance risk management and innovation, profoundly affecting the reconstruction of the global financial order.