Beijing rides US stablecoin wave to global shores

Beijing rides US stablecoin wave to global shores

On 18 July 2025, US President Donald Trump signed the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act into law. The GENIUS Act sets federal standards for dollar-pegged stablecoins and widens the pool of potential stablecoin issuers.

This legislation sets the stage for a new era of digital financial products. But it also exposes the United States’ financial infrastructure to foreign actors, including Chinese fintech giants that dominate global digital payments.

Web3 — the next iteration of the internet — focuses on decentralisation, emphasising openness, transparency and a user-centric experience. Stablecoins are a key component of Web3 as a type of cryptocurrency designed to maintain a stable value by being pegged to a real-world asset like the US dollar. Following Trump’s ban on central bank digital currencies, stablecoins offer a way for the United States to participate in the crypto ecosystem.

Stablecoins could facilitate financial inclusion in the Global South, where traditional banking remains limited despite increasing mobile internet connectivity. Stablecoins’ ability to provide instant settlement, low transaction costs and borderless utility empowers individual users and small businesses to bypass inefficient legacy systems.

The GENIUS Act has spurred a surge of private enterprises seeking to issue stablecoins in the United States. Companies like Meta, JPMorgan, Amazon and Walmart have announced their intentions to leverage stablecoins in some form, from cross-border payments to token issuance. This opens the door to foreign enterprises seeking entry into the US market, enabled by unified regulatory standards. While the GENIUS Act applies only within US jurisdictions, its establishment of clear regulatory standards for US dollar-pegged stablecoins indirectly influences global actors seeking to disrupt US dollar hegemony.

Instead of launching stablecoins directly under GENIUS within the United States, Chinese fintech firms are more likely to leverage regulatory clarity in third-party jurisdictions to issue US dollar-backed stablecoins that can interact with the broader global ecosystem, including US-based platforms.

Companies like Alipay’s owner Ant Group and JD.com are already seeking licences to become stablecoin issuers in markets like Hong Kong and Singapore, which offer clearer regulatory frameworks. These financial centres provide ideal launchpads for stablecoins that can eventually interface with US dollar-denominated systems and platforms.

Unlike the tightly controlled Chinese yuan, the Hong Kong dollar and Singapore dollar are both globally traded, highly liquid and operate under a legal and regulatory framework that is better understood and more interoperable with Western financial systems. By issuing stablecoins backed by trusted foreign currencies, Chinese tech firms can present themselves as politically neutral while retaining strategic control over digital fund flows and technologies.

Both Hong Kong and Singapore have deep histories of digital currency experimentation. Hong Kong participated in the Bank for International Settlements-led Project mBridge that began in 2021. Singapore developed Project Ubin to conduct interbank payments using blockchain in 2016. Hong Kong further solidified its progressive position towards digital assets by passing a stablecoin bill in May 2025, while Singapore finalised its regulatory framework for stablecoins in 2023.

These regulatory environments offer a credible on-ramp for Chinese-issued stablecoins as Chinese firms already control a significant percentage of the digital payments market within Southeast Asia. This enables Beijing to have indirect control over systems that, on the surface, appear Western-compliant.

This creates an alarming proposition for the Global South’s population, where many lack viable access to financial services. As a result, users in developing regions have adopted Chinese payment platforms like Alipay, WeChat Pay and JD Pay by default. Introducing stablecoins to these regions through Chinese payment platforms could allow these companies to offer GENIUS Act-compliant infrastructure, bypassing US regulatory scrutiny.

By issuing US dollar-compatible stablecoins under the GENIUS Act, these companies can circumvent traditional US financial institutions and gain greater control over capital flows in developing economies. This creates the potential for a parallel financial system that is superficially aligned with US standards but strategically beneficial to China’s long-term goals. These goals include reduced global reliance on the US dollar and greater adoption of Chinese technical standards.

Tether, the world’s largest stablecoin by market capitalisation, has been key in reinforcing the US dollar’s role in the greater digital asset ecosystem. But the rise of Chinese-backed stablecoins in legally neutral jurisdictions could complicate this dominance by introducing alternative, yet dollar-linked, infrastructure without US governance.

China has long understood that setting the rules of emerging technologies in the Web3 ecosystem is as critical as innovating them. For example, China is aggressively pursuing the internationalisation of the digital yuan, calling for the development of a multipolar global currency system. China trialled cross-border payments with Saudi Arabia and other partners, and enabled digital yuan usage in Hong Kong in 2024.

As the digital assets landscape becomes more fragmented, China is positioning itself as the architect of the next generation’s monetary systems. With US policymakers focused on innovation and compliance, the broader strategic implications of the GENIUS Act risk going unexamined.

While the GENIUS Act is a positive step towards modernising the United States’ digital financial infrastructure, it does have implications for strategic competition. Rather than directly enabling Chinese stablecoin issuers within US borders, the GENIUS Act’s standardisation of dollar-denominated assets creates incentives for overseas alignment by actors seeking to appear compliant with US-based financial norms while operating outside US jurisdiction.

As stablecoins become increasingly central to global finance, US policymakers must ensure that US openness does not become a backdoor for competitor influence. This is critical as Chinese platforms position themselves as compliant while embedding technical dependencies. These platforms use financial technologies as instruments of soft power, economic coercion and strategic control.

Hugh Harsono is a consultant working at the intersection of strategy, innovation, product management and product policy.

https://doi.org/10.59425/eabc.1757023200

Source: East Asia Forum