China's AxCNH Stablecoin vs. U.S. Dollar Tokens: Who Will Dominate the $300B Cross-Border Payments Market?

The global stablecoin market, valued at $300 billion in 2025, has become a battleground for financial innovation and geopolitical influence. At the center of this competition are U.S. dollar-backed stablecoins like Tether's USDT and Circle's USDC, which dominate 92.3% of the market, and China's AxCNH, a yuan-pegged stablecoin launched in September 2025 to challenge dollar hegemony in cross-border trade. This analysis evaluates the strengths, weaknesses, and strategic trajectories of both ecosystems to determine which stablecoin is poised to lead the next era of global payments.

Market Dynamics: USD Dominance vs. Yuan Ambitions

U.S. dollar-backed stablecoins have entrenched themselves as the backbone of cross-border transactions. As of Q1 2025, USDT and USDC collectively accounted for 92.3% of the stablecoin market, with USDT alone holding $112 billion in circulation and USDC at $58 billion Stablecoin Statistics 2025: Growth, Adoption, and^[1]. These tokens process over $27.6 trillion in transactions annually, surpassing Visa and Mastercard in volume Stablecoins and Cross-Border Transactions: A Game^[2]. Their dominance is driven by deep liquidity, institutional trust, and regulatory clarity in the U.S., where the GENIUS Act of 2025 established a federal framework for stablecoin issuance, emphasizing reserve transparency and consumer protection The Future of Payments: US Stablecoin Legislation^[3].

China's AxCNH, by contrast, is a nascent but strategically ambitious entrant. Pegged 1:1 to the offshore yuan (CNH), it is overcollateralized with fiat deposits or government debt, ensuring stability and regulatory compliance AxCNH: the first licensed CNH stablecoin for 24/7 cross-border payments^[4]. Launched by Hong Kong-based AnchorX during the 10th Belt and Road Summit, AxCNH aims to reduce settlement costs by over 30% for BRI participants and streamline trade settlements China’s AxCNH stablecoin vs. U.S. dollar tokens - AMBCrypto^[5]. Early adopters like Zoomlion and Lenovo have already tested AxCNH transactions on the Conflux blockchain, while its listing on Kazakhstan's ATAIX exchange in AxCNH:KZT and AxCNH:USDT pairs signals a push for regional integration AxCNH Stablecoin: China's Challenge to Dollar Dominance^[6].

Regulatory Frameworks: U.S. Clarity vs. Chinese Constraints

The U.S. regulatory environment has been a key enabler for USD stablecoins. The GENIUS Act, passed in July 2025, mandates 100% reserve backing, monthly disclosures, and annual audits, addressing concerns about solvency and transparency The Future of Payments: US Stablecoin Legislation^[3]. This framework has attracted institutional investors and fintechs, with USDC's market cap surging to $56 billion in early 2025 as it became the preferred stablecoin for DeFi protocols and regulated platforms USD Coin Statistics 2025: Adoption, Trading Volume^[7]. Meanwhile, the SEC's clarification that USD-backed stablecoins are not securities has further reduced legal risks for issuers Statement on Stablecoins - SEC.gov^[8].

China's approach to AxCNH is more cautious. While the stablecoin is licensed by Hong Kong and Kazakhstan's Astana Financial Services Authority, it faces hurdles from Beijing's strict capital controls and limited offshore CNH liquidity China's AxCNH stablecoin vs. U.S. dollar tokens - AMBCrypto^[9]. Global regulatory skepticism also persists, as AxCNH must navigate fragmented frameworks like the EU's MiCA and Hong Kong's licensing requirements to achieve cross-border interoperability EU’s MiCA Regulation^[10]. These constraints may limit its adoption outside Asia, where U.S. dollar-backed stablecoins remain dominant.

Adoption and Transaction Volumes: USD's Edge in Scale

Transaction data underscores the scale of USD stablecoins. In Q1 2025, USDT and USDC processed $27.6 trillion in transactions, with USDC accounting for 12% of stablecoin volume in cross-border swaps Stablecoin Industry Report: Q2 2025^[11]. USDT's dominance in high-frequency trading and remittances is bolstered by its presence on 15+ blockchains and 1,200+ exchanges USDT vs USDC: Detailed Comparison for Crypto Traders in 2025^[12]. Meanwhile, 43% of B2B cross-border payments in Southeast Asia now use stablecoins, with USDC leading in Latin American remittances Stablecoin Market Share by Chain Statistics 2025^[13].

AxCNH's transaction volumes remain undisclosed, but its early-stage adoption is promising. Pilot transactions by Zoomlion and Lenovo suggest it is gaining traction in BRI corridors, while its listing on ATAIX indicates potential for growth in Central Asia China Launches AxCNH Stablecoin in Bid to Challenge Dollar Dominance^[14]. However, AxCNH's market capitalization is currently negligible compared to USDT and USDC, and its on-chain activity is concentrated among professional clients rather than retail users AxCNH: World's First Licensed Offshore Chinese Yuan-Pegged Stablecoin Debuts at the 10th Belt and Road Summit^[15].

Challenges and Opportunities

Non-USD stablecoins like AxCNH face systemic barriers. China's capital controls restrict the free flow of CNH, limiting AxCNH's utility for global trade. Additionally, geopolitical tensions and the U.S. dollar's entrenched role in international finance create headwinds for yuan-backed alternatives China Enters Global Stablecoin Race with AxCNH Yuan Token for^[16]. Conversely, USD stablecoins must contend with regulatory scrutiny over money laundering risks and the potential for fragmentation if the U.S. imposes stricter reserve requirements The Stablecoin Race in Payments: USDT, USDC, PYUSD in 2025^[17].

AxCNH's success hinges on its ability to integrate with traditional financial systems and expand beyond BRI partners. If China relaxes capital controls or partners with more B2B firms, AxCNH could capture a niche in cross-border trade. However, USD stablecoins are likely to retain dominance in the short term due to their established infrastructure and regulatory tailwinds.

Future Outlook: A Diversified Landscape?

The stablecoin market is evolving toward diversification, with South Korea's KRW1 and other regional stablecoins entering the fray China’s CNH Stablecoin Debuts, Boosting Digital Yuan’s Global Influence^[18]. While AxCNH represents a strategic challenge to U.S. dollar dominance, its adoption will depend on geopolitical shifts and China's willingness to liberalize its financial system. In the meantime, USD stablecoins are well-positioned to maintain their lead, supported by U.S. regulatory clarity and global demand for dollar-pegged liquidity.

Conclusion

The race for cross-border payment dominance is far from over. U.S. dollar-backed stablecoins currently hold an insurmountable lead in market share, transaction volume, and regulatory support. However, AxCNH's strategic alignment with the Belt and Road Initiative and its overcollateralized model position it as a viable alternative for regional trade. Investors should monitor China's regulatory moves and AxCNH's integration into global payment networks, but for now, the U.S. dollar's grip on the stablecoin market remains unchallenged.