Stablecoin Wars & CBDC Clashes: How Onchain Politics Will Ignite the Next Blockchain Battlefield | Expert Take
The crypto cold war is heating up—and stablecoins are the nukes.
Forget 'too big to fail.' In 2025, the real fight is over who controls the rails of digital money. Central banks are deploying CBDCs like financial Trojan horses, while private stablecoins pivot from 'decentralized ideals' to lobbying firepower. The blockchain isn’t just recording transactions anymore—it’s becoming the geopolitical chessboard.
Subheader: The 3 Fronts of Onchain Warfare
1. Regulatory chokeholds: How the SEC’s 'regulation by lawsuit' strategy accidentally gave Tether a 72% market share.
2. Privacy paradox: Why every 'compliant' CBDC transaction is a surveillance goldmine.
3. Liquidity mercenaries: The shadowy algo-stablecoin farms exploiting arbitrage gaps (and how TradFi secretly loves them).
Meanwhile, Ethereum’s L2 networks are becoming the Switzerland of this conflict—neutral ground where all sides park their reserves while talking trash. The irony? The more governments try to control crypto, the faster they legitimize its infrastructure. Nothing unites rivals like a common enemy—in this case, the 20th-century banking system still using SWIFT like a fax machine.
Closing thought: When the dust settles, the 'winners' will be whoever convinces markets they’re the least centralized—while holding the most centralized power. Classic finance, but with better PR.
Stablecoin wars are stirring
The coming decade will be characterized by a return to regionalism as the age of post-globalization begins in earnest. The U.S is walking back its overseas interests and returning to a domestic “America first” policy. Other regions, including Europe, grappling with trade tariffs and the repercussions of global conflicts that impact logistics and energy prices, are also now looking to domestic alternatives for everything from cloud computing to AI.
This seismic shift is also being reflected within the crypto industry as exchanges become picky about which regions they serve, crypto services become localized, and legislation such as the EU’s Markets in Crypto-Assets Regulation compels stablecoin issuers to park assets in European bank accounts and submit to stringent regulation. Blockchain might be borderless, but the platforms that run on it are increasingly becoming geo-restricted.
Some of this is just a natural consequence of global regions belatedly starting to regulate crypto assets, which means adding onerous laws that, while designed to support innovation, invariably add more hoops that must be leapt through in order to remain compliant. But the politicization of crypto is about more than merely competing regulatory standards: it’s also about what nation-states are doing when it comes to blockchain. Here, the same differences that divide them in real life look poised to do the same onchain.
Rise of the nation chains
The GENIUS Act is great if you’re a major U.S. stablecoin issuer or a U.S. business wondering if it’s okay to accept USDC for payments. But it makes life significantly harder for overseas stablecoin issuers and users. Foreign stablecoin issuers must comply with U.S. regulations or face a potential ban if deemed non-compliant by the Treasury Department. The Act also mandates enhanced oversight of foreign issuers and coordination with issuers before blocking transactions.
In the new stablecoin economy the U.S. is building, it’s safe to say that Russia, China, and pariah states such as Iran aren’t invited. That is why the likes of Russia and China are pressing ahead with their own systems for CBDCs. They’ll still run on a blockchain of some kind, but it will be permissioned and localized: a walled garden for domestic consumption only. Blockchain is going to become balkanized, and while Bitcoin (BTC) will still be global, many of the chains being used for digital currency will run only as far as the national borders of their operator. As you read these words, the rise of the nation chains is underway.
Searching for a global unit of account
Despite its vast national debt and refocus on domestic business, the U.S. still dominates global trade with its dollar forming the de facto global unit of account. While it’s in no danger of being supplanted by another fiat currency, its dominance is poised to diminish as national and regional governments champion their own stables, pegged to things like the EUR, YEN, and CNY.
But even within the family of stablecoins that are pegged to the U.S. dollar, and which serve as the crypto industry’s default pricing mechanism, a shakeup is underway. Where once there were many dollar-pegged stablecoins to choose from, ranging from fiat-backed to crypto-collateralized, soon there will likely be few. Binance’s BUSD has already been reined in by U.S. regulators, while the GENIUS Act outright bans algorithmic stablecoins.
Because the GENIUS Act favors large corporations over small stablecoin issuers, it will effectively heighten monopolization, allowing a handful of approved companies to dominate proceedings. Given the onerous compliance costs and reporting standards now placed on them, not just in the U.S. but in regions like Europe too, private stablecoin issuers have some tough choices to make. Do they “subscribe” to the onerous requirements demanded by regulators or retreat into the shadows?
By the end of 2025, expect to see more than 40% of DEX stablecoin volume replaced by “official” digital currencies or certain stablecoins blocked in certain jurisdictions. Against this backdrop of competing regulations, stricter stablecoin controls, and higher compliance costs, there is also the specter of Strategic bitcoin Reserves, assembled by national governments, to factor in. Bitcoin is meant to be apolitical, but if global nations start stockpiling it like it were depleted uranium, it risks becoming the battleground for a digital resource war.
The silver lining
The prospect of increased politicization leading to the balkanization of the onchain landscape makes for gloomy reading. Can’t crypto users just be left alone to trade their tokens in peace without being penalized by which country they’re from or which stablecoin they’re holding? While the emergence of competing CBDCs and regionalized stablecoins adds complexity to an already fragmented onchain landscape, there is a silver lining to all this.
No one’s trying to ban Bitcoin anymore or put the buffers on blockchain innovation. This is the age of AI, after all, where no nation wants to be last to adopt technologies that will define human progress and economic growth for a generation. And the stablecoin genie won’t go back in the jar either. Tokens and blockchain technology aren’t going anywhere, and will continue to make inroads into every aspect of our lives.
A few years ago, confessing to owning crypto made you look like an outsider and caused your bank to start asking awkward questions. Not anymore. When everyone’s guilty of using blockchain, no one’s guilty. So while the politicians do their politicking and regulators their regulating, crypto users should keep calm and carry on. They’ve already won. Now it’s left to the states to joust it out in the blockchain battlelines that are being drawn up.
Tracy Jin is the chief operating officer at MEXC, a leading global cryptocurrency exchange. With over a decade of fintech experience, including executive roles at major firms like Bybit, she focuses on enhancing institutional-grade security, risk management, and trading efficiency in the crypto markets. Jin’s visionary approach has propelled MEXC towards becoming a key player in the global crypto ecosystem. She holds a Master’s degree in Software Development from Galway-Mayo Institute of Technology.
