Today (5th), the top trending topic on the Chinese version of TikTok was "What are Stablecoins". Against the backdrop of China's strict stance on crypto trading, this keyword suddenly went viral, indicating that cryptocurrency topics can still attract public attention in China.
Image source: X account of crypto researcher Jason Chen
So hot! What market signals are behind this?
TikTok's clicks and discussions reveal three signals. First, Chinese people are beginning to view stablecoins as the "dollar" of the blockchain world, no longer seeing cryptocurrencies as just high-risk assets, especially as discussions about issuing offshore RMB stablecoins are emerging in China.
Extended reading: JD.com and Ant Group lobbying the central bank to issue offshore "RMB stablecoins" in Hong Kong, challenging US dollar hegemony
Moreover, Trump emphasizing financial innovation encouragement after potentially returning to the White House in 2025 is attracting more Wall Street institutions, thereby amplifying market demand for stablecoins, a sentiment now "surfacing" among Chinese citizens.
Lastly, global funds are seeking channels amid USD strength and risk-averse needs. Stablecoins, with their cross-border and low-volatility characteristics, have become institutions' preferred entry point to the crypto market, a topic now occupying social platforms even in Asia.
Decoding Stablecoins: Types, Mechanisms, and Value
Stablecoins are pegged to assets like USD to reduce price volatility, providing a stable pricing unit for trading, settlement, and lending. They are categorized into four types based on collateral and design. Fiat-collateralized types like USDC and USDT are backed 1:1 by bank deposits and short-term government bonds, with regular audits forming the basis of trust. Crypto-collateralized types like Dai are maintained through over-collateralization and smart contracts. Commodity-collateralized types use physical assets like gold, suitable for specific scenarios. Algorithmic types exposed design weaknesses during the TerraUST collapse, sounding a market warning. During circulation, arbitrageurs adjust supply through minting and burning mechanisms to keep prices close to the target.
China and US Perspectives on Stablecoins
Globally, regulators are racing to establish oversight. The US GENIUS Act accelerates legislation, preparing to establish federal reserve and audit frameworks to strengthen USD stablecoin pricing power. JP Morgan and Standard Chartered estimate stablecoins will reach hundreds of billions to trillions in the coming years.
European and Asian regulatory bodies often require consistent KYC/AML standards, indicating that cross-border stablecoin supervision coordination is the biggest breakthrough.
While China continues to ban crypto trading and mining, TikTok's traffic peak inadvertently reveals that some decision-makers are considering financial topics. On one hand, stablecoins might compete or collaborate with the central bank digital yuan; on the other hand, capital outflow risks might increase. Whether Chinese officials will reference overseas experiences to establish transparent stablecoin reserve regulations and allow pilot scenarios remains a key observation point.
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