US Policy Group Claims China Fears USD Stablecoins’ Dominance

Dollar-pegged digital assets rattling Beijing's financial control—policy watchdogs spot regulatory panic behind the Great Wall.

The Real Threat: Stablecoin Sovereignty

USD-backed tokens bypass traditional banking channels—cutting through capital controls like hot knives through bureaucratic butter. China's resistance isn't about technology rejection; it's about monetary sovereignty erosion. Their CBDC efforts look increasingly like defensive maneuvers against dollarization via code.

Policy Paranoia or Prudent Caution?

When stablecoins handle more daily volume than some national economies, ignoring them becomes strategic negligence. Beijing isn't scared of the technology—they're terrified of losing monetary gatekeeper status. Their reaction exposes the real battle: not crypto vs. fiat, but open vs. closed financial systems.

Meanwhile, traditional finance still can't decide if stablecoins are revolutionary infrastructure or just fancy wire transfers—probably because they'd have to admit their 9am-5pm settlement system belongs in a museum.

USD Stablecoins and US Policy

The Council on Foreign Relations (CFR), a prominent US think tank on diplomacy and international politics, has raised alarms about stablecoin geopolitics. In a recent article, CFR scholar Zongyuan Zoe Liu argued that Washington’s new GENIUS Act transforms dollar-backed tokens into credible, regulated money.

With banks guaranteeing one-to-one redemption, stablecoins could soon sit alongside deposits and commercial paper as cash equivalents.

CFT notes that this credibility could drive explosive growth. Estimates suggest up to $1.75 trillion in stablecoins may circulate within three years. Meanwhile, the effects WOULD reverberate far beyond crypto, strengthening the dollar’s global dominance.

Beijing’s Growing Anxiety

For Beijing, this shift is deeply unsettling. Stablecoins combine the liquidity of dollars with the portability of blockchain, bypassing conventional capital controls. Therefore, that undermines one of the Communist Party’s main economic and political power levers.

Export-oriented firms might eagerly adopt stablecoins to cut transaction costs. Notably, dollar tokens could be used daily, edging out the renminbi in key markets. CFR calls this risk “existential” for Chinese monetary sovereignty.

Chinese researchers echo the concern. Even state media have warned that dollar stablecoins could lock in US financial supremacy, undercutting years of Beijing’s effort to build renminbi-based alternatives.

Controlled Experiments Ahead

China’s record shows a preference for harnessing blockchain under tight state oversight. The central bank launched the e-CNY to preempt private tokens, but adoption has been sluggish. Alipay and WeChat Pay still dominate China’s digital payments.

Hong Kong has become a laboratory. New rules permit licensed issuers to launch fiat-backed stablecoins, including offshore renminbi versions. Such tokens allow controlled experimentation without loosening mainland capital restrictions.

Future renminbi stablecoins are expected to be programmable and fully traceable. This may help with anti–money laundering and expand financial surveillance. CFR concludes that Beijing will use stablecoins to encode state control, not dilute it.