The stablecoin market size has surged to approximately $240 billion, recording significant growth in this digital asset class.
According to CoinGecko data, Tether (USDT) and USD Coin (USDC) account for 83% of the global stablecoin market. However, Chinese economists are concerned that the explosive increase in USD-pegged stablecoins could further strengthen the dominance of the US dollar.
Stablecoin Boom... USD's Role
Stablecoins, known for price stability, have become a crucial bridge between traditional finance and cryptocurrencies by being pegged to assets like the US dollar.
According to CoinGecko data, the market capitalization of stablecoins increased from $133 billion in 2024 to $240 billion in early 2025, indicating increased adoption in cryptocurrency trading, cross-border payments, and DeFi.
USDT and USDC dominate the market as the two largest stablecoins. Donald Trump's support has partially fueled their rapid growth. Recently, Trump urged Congress to pass a stablecoin bill to strengthen the global position of the USD.
"I have asked Congress to create simple and common-sense rules for stablecoins and market structure. Through an appropriate legal framework, large and small institutions will be able to invest, innovate, and participate in one of the most interesting technological revolutions in modern history," Donald Trump said.
Chinese Concerns, Stablecoins, and Financial Power
The dominance of USD-pegged stablecoins has economic and geopolitical implications. Chinese economist Zhang Ming argues that stablecoins are a trading tool for the US to maintain economic power in the digital age.
"US dollar stablecoins can significantly consolidate the US dollar's hegemony by more closely linking the international credit of the US dollar with application scenarios in the virtual world," Zhang Ming said.
This is particularly concerning for China. China developed the Cross-Border Interbank Payment System (CIPS) to reduce dependence on SWIFT and counter US financial sanctions. If USD stablecoins dominate international payments, it could weaken China's efforts to minimize USD influence.
Moreover, EU officials have warned that the US stablecoin push could weaken euro stability.
To offset this, Zhang Ming suggests China should focus on the Chinese Digital Yuan (e-CNY), a Chinese CBDC issued by the People's Bank of China (PBoC), aimed at directly competing with USD stablecoins.
e-CNY adoption is accelerating. According to the Atlantic Council, the total transaction value of e-CNY reached 7 trillion yuan ($986 billion) as of June 2024, nearly quadrupling from 1.8 trillion yuan ($253 billion) in July 2023. By July 2024, the e-CNY app had attracted 180 million individual users, with cumulative transaction value in pilot regions reaching 7.3 trillion yuan ($1 trillion), according to Euromoney.
According to Ledger Insights, e-CNY circulation increased from 13.61 billion yuan in 2022 to 16.5 billion yuan by June 2023. These figures indicate that China is rapidly promoting domestic adoption while laying the groundwork for international expansion.
Integrating e-CNY into cross-border payments is a strategic move. The mBridge project, a collaboration between PBoC and the Bank for International Settlements (BIS), expanded testing with 11 central banks in 2024, demonstrating potential to compete with USD stablecoins in global trade.
However, to succeed, China must overcome challenges such as capital flow restrictions and concerns about financial system transparency.
