The Geopolitical and Financial Implications of Stablecoin Expansion in Asia

In 2025, the global stablecoin race has become a battleground for geopolitical influence, with Asia at its epicenter. The U.S. and China are locked in a high-stakes competition to dominate cross-border digital finance, leveraging stablecoins as tools to extend their economic reach. For investors, understanding the strategic positioning of RMB-pegged stablecoins against USD-backed counterparts is critical. This article unpacks the financial and geopolitical dynamics shaping this race—and how investors can position themselves for its outcomes.

The Strategic Imperative: RMB-Pegged Stablecoins as a Counter to Dollar Dominance

The U.S. has long held the reins of global finance through the dollar's dominance in trade and reserves. The GENIUS Act, passed in 2025, has further cemented this by creating a regulatory framework that legitimizes USD-backed stablecoins. Tether and Circle now control 85% of the $247 billion stablecoin market, ensuring the dollar's grip on cross-border payments. However, China is not standing idle.

The People's Bank of China (PBOC) has acknowledged the strategic risk of lagging behind. Governor Pan Gongsheng's remarks at the 2025 Lujiazui Forum highlighted the growing use of stablecoins for cross-border transactions—a shift that could undermine the yuan's internationalization if China does not act. The Securities Times, a state-owned publication, has openly urged the development of a yuan-backed stablecoin “sooner rather than later.”

Hong Kong has emerged as the testing ground for this ambition. The city's Stablecoins Ordinance, effective August 1, 2025, allows for the issuance of stablecoins pegged to the offshore RMB (CNH). This regulatory sandbox has attracted 50+ applicants, including Ant Group and JD.com, which are leveraging the framework to bypass China's strict capital controls and test cross-border payment models.

Competitive Dynamics: RMB vs. USD in Cross-Border Finance

The U.S. and China are deploying stablecoins to reshape cross-border finance. USD-backed stablecoins benefit from the dollar's entrenched role in global trade, but RMB-pegged alternatives offer distinct advantages for Asian economies. For example, JD.com's Hong Kong dollar-pegged stablecoin has already reduced transaction costs in Belt and Road Initiative (BRI) trade. If scaled to CNH, such tokens could further lower reliance on the dollar and accelerate the yuan's adoption in global commerce.

The PBOC's cautious stance—rooted in fears of currency substitution and capital flight—contrasts with Hong Kong's proactive approach. By using its offshore RMB liquidity pool (approx. 1 trillion yuan), Hong Kong could serve as a bridge for RMB-pegged stablecoins to gain traction in markets like Southeast Asia and the Middle East, where inflation and dollar volatility create demand for alternative stable assets.

However, the U.S. is not ceding ground. The GENIUS Act's requirement for stablecoin issuers to maintain 1:1 reserves in U.S. Treasuries and cash has reinforced the dollar's stability. Morgan Stanley economists note that USD-backed stablecoins could bypass traditional banking networks, offering a cost-effective solution for global trade. This dual-track strategy—legitimizing dollar stability while stifling competition—highlights the U.S.'s intent to maintain its financial hegemony.

Geopolitical Implications for Investors

The stablecoin race is not just a financial competition; it is a geopolitical chess game. For China, RMB-pegged stablecoins represent a pathway to de-dollarize trade and reduce vulnerability to U.S. sanctions. For the U.S., maintaining dollar dominance is a matter of national security.

Investors must weigh these dynamics. The success of RMB-pegged stablecoins hinges on regulatory alignment between China and Hong Kong, as well as trust-building with international markets. Conversely, USD-backed stablecoins face risks from overregulation and the erosion of the dollar's global role.

Investment Advice: Positioning for the Future

1. Support Hong Kong's Ecosystem: Companies like Standard Chartered and Animoca Brands, which are leveraging Hong Kong's regulatory sandbox, offer exposure to RMB-pegged stablecoin innovation.
2. Monitor Chinese Tech Giants: Ant Group and JD.com are leading RMB-pegged stablecoin pilots. Their cross-border revenue growth will signal the market's potential.
3. Diversify Currency Exposure: Investors should consider hedging against dollar volatility by allocating to RMB-pegged stablecoins, particularly in markets with high inflation (e.g., Southeast Asia).
4. Track PBOC Signals: Any shift in China's stance toward stablecoins—such as a green light for CNH-pegged tokens—could trigger a surge in adoption.

Conclusion

The expansion of RMB-pegged stablecoins in Asia is a strategic countermeasure to U.S. dollar dominance. While challenges remain—including regulatory hurdles and geopolitical tensions—the potential rewards for investors are significant. By aligning with the right players and monitoring key indicators, investors can navigate this evolving landscape and capitalize on the next frontier of digital finance.