In recent months, stablecoins have rapidly moved from a niche topic to a major focus within global financial discussions. The surge in interest is driven by regulatory advancements, institutional adoption, and the growing recognition of their potential to reshape cross-border payments and asset tokenization.
This article explores the reasons behind this sudden rise, key use cases, major players entering the market, and what it means for the future of digital finance.
Reduced Over-Reliance on the US Dollar
A significant factor behind the growing interest in stablecoins is the desire to reduce global over-dependence on the US dollar for trade and reserves.
Stablecoins are a type of cryptocurrency designed to maintain a stable value by being pegged to a reserve asset, most commonly a fiat currency like the US dollar. They combine the stability of traditional money with the efficiency, transparency, and borderless nature of blockchain technology. Currently, USDT and USDC dominate the stablecoin market, collectively accounting for over 90% of the total market share, and both are pegged to the US dollar.
This momentum marks a notable shift in regulatory posture. In a key speech in June, the People's Bank of China (PBOC) Governor Pan Gongsheng acknowledged the potential for digital yuan and stablecoins to serve as new solutions for cross-border settlement. He cited the low efficiency of the current global payment systems and frequent geopolitical risks as drivers for seeking new alternatives.
This shift is partly a response to global developments. A crucial background factor is the further legalization of dollar-backed stablecoins in the United States. The passage of the so-called "GENIUS Act" by the U.S. Senate in May establishes a federal regulatory framework. Key requirements include:
- Stablecoin issuers must hold 100% reserves in dollars and short-term U.S. treasury bonds.
- Monthly public disclosure of reserve compositions is mandatory.
- A tiered regulatory system is implemented.
- Strict anti-money laundering (AML) controls are enforced.
This act effectively grants a "chain-based dollar" a legal identity, potentially integrating it into global payment infrastructure and further expanding the dollar's reach.
Consequently, exploring alternative stablecoins, including those potentially pegged to other currencies, is seen by many economies as a strategic move towards a more diversified international monetary reserve system. Hong Kong has emerged as a key testing ground for this exploration. Its Stablecoin Ordinance, set to take effect on August 1st, establishes a licensing regime for issuers of fiat-referencing stablecoins, with rules similar to the U.S. framework, including 100% reserve backing and robust operational controls.
How Are Stablecoins Actually Used?
With a regulatory foundation being laid, the practical applications of stablecoins are coming into focus. The two most discussed use cases are the重构 (restructuring) of cross-border payments and the tokenization of Real-World Assets (RWA).
Revolutionizing Cross-Border Payments
The traditional cross-border payment system is often slow and expensive, involving multiple intermediaries like correspondent banks and card networks (Visa, Mastercard). These intermediaries charge fees, which can be as high as 2-3% of the transaction value in the U.S.—a cost often passed on to consumers. Settlements can also take 1-3 business days, tying up valuable cash flow for businesses.
Stablecoins, leveraging blockchain technology, can streamline this process dramatically. A stablecoin payment is a direct, peer-to-peer transfer from a consumer's digital wallet to a merchant's, bypassing most intermediate parties. This slashes transaction costs and enables near-instant settlement, 24/7, finalizing in seconds rather than days.
Furthermore, because they operate on open, public blockchains, stablecoins possess a innate borderless quality, potentially challenging the core network advantage of traditional card organizations by creating a new, unified global payment network.
Real-World Asset (RWA) Tokenization
RWA tokenization involves converting rights to a physical or intangible asset—like real estate, commodities, or bonds—into a digital token on a blockchain. These tokens can then be traded globally, enhancing liquidity for assets that are traditionally illiquid.
Stablecoins are poised to become the essential "currency" for trading these tokenized assets. Using a compliant stablecoin for pricing and settlement allows for direct peer-to-peer transactions, simplifying the cumbersome processes traditionally reliant on centralized systems like SWIFT and banks.
For instance, Ant Digital Technologies completed China's first cross-border financing for renewable energy using RWA in August 2024. Later, in December, they executed another first with a tokenized photovoltaic project valued at over RMB 200 million.
For individual investors, the development of regulated stablecoins could eventually provide access to a low-volatility, cash-like asset for portfolio diversification within the digital asset ecosystem. 👉 Explore more strategies for digital asset allocation
Who Are the Key Players Backing Stablecoins?
As Hong Kong prepares to issue its first stablecoin licenses, a diverse group of institutions are actively positioning themselves in this emerging arena. The Hong Kong Monetary Authority (HKMA) is expected to announce the first batch of licensed issuers soon.
Major technology and financial firms are at the forefront:
- Ant Group: Ant Digital Technologies has applied for a stablecoin license in Hong Kong and has established an overseas headquarters there. Its parent company, Ant International, has announced plans to develop stablecoin businesses in Hong Kong, Singapore, and Luxembourg.
- JD.com: JD Technology's CEO has stated the company plans to officially obtain a Hong Kong stablecoin issuance license by the initial fourth quarter of 2025.
- Traditional Finance: Firms like Lianlian Digital and Linklogis are collaborating on stablecoin projects with partners such as RD Technologies and Standard Chartered. ZhongAn Bank has become Hong Kong's first digital bank to provide services to a stablecoin issuer.
- Investment: China Everbright Limited has invested in Circle, the issuer of USDC, which recently went public and is often called the "first stablecoin stock."
A CEO at a major asset manager noted that global commercial banks like Standard Chartered, HSBC, Deutsche Bank, and ANZ are among the most active in Hong Kong's tokenized payments space, with Standard Chartered being particularly invested in the Web3 ecosystem globally.
The prediction among industry leaders is that the global monetary system may eventually converge around a few major stablecoins. However, this process will depend on strong financial markets and vibrant trade ecosystems. Hong Kong's pioneering role could not only provide a new path for the internationalization of the yuan but also potentially reshape the underlying logic of international financial infrastructure.
Frequently Asked Questions About Stablecoins
Q1: What exactly is a stablecoin?
A stablecoin is a digital currency built on blockchain technology that is pegged to a stable reserve asset, like the US dollar or gold. This peg is designed to minimize price volatility, making it more suitable for everyday transactions and as a store of value compared to traditional cryptocurrencies like Bitcoin.
Q2: Why are regulators suddenly focusing on stablecoins?
Regulators are acting now because stablecoins have grown significantly in market size and are being integrated into the traditional financial system. Recent legislation, like the U.S. GENIUS Act, aims to protect consumers, ensure financial stability, prevent illicit finance, and establish clear rules of operation for issuers.
Q3: How do stablecoins improve cross-border payments?
They bypass the complex network of intermediary banks and card processors. By enabling direct peer-to-peer transfers on a blockchain, they significantly reduce transaction fees and settlement times—from days down to seconds—while operating 24/7.
Q4: What does RWA tokenization mean?
RWA (Real-World Asset) tokenization is the process of converting the value of a physical asset (e.g., real estate, gold, corporate bonds) into a digital token on a blockchain. This makes it easier to divide, trade, and manage ownership of these assets globally, increasing their liquidity.
Q5: Are stablecoins safe?
The safety of a stablecoin depends heavily on its issuer and regulatory compliance. A well-regulated stablecoin that is fully backed by high-quality, audited reserves and operates under a legal license is designed to be low-risk. Always research the issuer's transparency and regulatory status.
Q6: Can I invest in stablecoins?
While stablecoins are primarily designed for payments and as a stable medium of exchange rather than investment (as they aim not to appreciate in value), they are commonly used within the digital asset ecosystem as a safe haven during market volatility or as a base currency for trading other assets.