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China, Japan, and Others to Take on the USD-Pegged Stablecoin Initiative

dailystar

Much discussion has centered on the advantages of USD-pegged stablecoins for the U.S. economy, especially with the GENIUS Act clarifying the framework for issuers. However, do other countries have the potential to benefit from issuing stablecoins tied to their local currencies? The answer is yes, and several nations are already entering the competition.

Summary

  • USD-pegged stablecoins bolstering the U.S. dollar have prompted other countries to enhance their local currencies through the issuance of stablecoins.
  • Minimizing the dominance of USD-pegged stablecoins could lead to a reduction in deposits in local banks.
  • Countries like Japan and China are developing their national stablecoins, while the European Union is focused on creating a CBDC using Ethereum and Solana.

USD-pegged stablecoins as a remedy for the U.S. economy

The U.S. has dismissed the idea of creating a central bank-issued digital dollar. Critics have pointed to privacy concerns—suggesting that a central bank shouldn’t possess extensive control over transaction data.

Instead, the government has encouraged both public and private entities to issue stablecoins, which are digital currencies based on blockchain and backed by real assets typically at a 1:1 ratio with U.S. dollars or Treasury bills. Currently, around 99% of existing stablecoins are pegged to USD, ensuring each is valued equivalently to one U.S. dollar. Although stablecoin issuers do not directly generate revenue from these coins, they earn interest through their holdings of U.S. Treasury bills that back them.

While it may seem that the government relinquished some control in favor of the market, it actually fosters new growth opportunities for companies issuing stablecoins that must secure them with U.S. dollars and T-bills. This requirement stems from the GENIUS Act signed by President Donald Trump on July 18, 2025.

As stablecoins circulate freely and gain traction in the Global South, where local currencies are depreciating against the USD, they are increasingly utilized for remittances and as savings instruments. This heightened demand for USD-pegged stablecoins consequently amplifies the need for USD and T-bills, as issuers must back their coins with these assets.

Describing the mechanics of stablecoins in relation to the U.S. economy, BitMEX exchange co-founder Arthur Hayes provided insight into Tether, the largest USD-pegged issuer:

“Tether’s business model is straightforward: accept dollars, issue a digital token on a public blockchain, invest those dollars in T-bills, and earn the net interest margin set by the Federal Reserve. U.S. Treasury Secretary Scott Bessent will ensure that issuers supported by law will only hold dollars in chartered U.S. banks or treasury debt securities. No strange practices.”

Hayes emphasized that most countries, with the exception of mainland China, utilize American social media applications. If these platforms start facilitating USD-pegged stablecoin transactions, it could lead to significant capital outflow from the Global South and substantially increase demand for the U.S. dollar. Furthermore, this shift could essentially replace local banks with a U.S.-controlled digital currency.

On August 26, Trump promised to impose significant tariffs on nations attempting to “discriminate against American Technology” through digital taxes and regulations. Essentially, opposing the adoption of stablecoin exchanges on platforms like WhatsApp could be a costly strategy for these countries.

When the U.S. prints more dollars, it decreases the value of USD reserves held by other countries. It’s no surprise that many nations have recently opted to accumulate more gold. The combination of American stablecoins alongside American technological prowess could elevate the USD’s value beyond its current standing.

However, this also risks making U.S. exports prohibitively expensive. Given Trump’s focus on enhancing U.S. manufacturing and export levels, a robust dollar might not align with this objective. Some argue that a bolstering dollar exacerbates the national debt, yet the rising interest in stablecoins fuels demand for T-bills, gradually mitigating that debt burden.

China moves toward launching a yuan-pegged stablecoin

China stands out as one of the rare countries with influential social media platforms, such as WeChat. The introduction of a yuan-pegged stablecoin may initiate effects parallel to the U.S. approach. With an economy heavily reliant on exports, stablecoins could be a more appealing option than traditional yuan transfers, facilitating quick and cost-effective remittances.

Consequently, Chinese authorities have opted not to stand idly by as American stablecoins potentially overshadow the yuan. In 2021, China rolled out the digital yuan, a CBDC that didn’t gain substantial traction, losing ground to services like WeChat Pay and AliPay.

In May 2025, Hong Kong implemented the Stablecoins Bill, enabling the issuance of stablecoins tied to Chinese assets. On August 20, reports surfaced that the State Council of China is actively pursuing a yuan-pegged stablecoin designed for international trade.

If yuan-pegged stablecoins issued by banks come to fruition, they could serve as a counterbalance to the influx of U.S. dollar-pegged stablecoins. Given that the renminbi’s market share has fallen below 3% while the USD’s exceeds 47%, China sees a clear objective ahead.

Japan poised to launch a yen-pegged stablecoin

Tokyo-based Monex Group made waves on August 26 by announcing plans for a yen-pegged stablecoin. The company aspires to replicate the success seen in the U.S. However, Japan’s lack of competitive social media resources akin to those in the U.S. and China could limit the yen’s prospects in this arena.

Nonetheless, Monex aims to anchor its stablecoins with Japanese government bills, targeting cross-border remittances and corporate transactions. Anticipation around the project may be bolstered by Coincheck, a crypto exchange under Monex’s umbrella. Moreover, Monex chairman Oki Matsumoto mentioned plans to acquire several European crypto firms, expanding their stablecoin platform further. The launch is expected in the fall of 2025.

European Union’s initiatives

European Central Bank economist Piero Cipollone pointed out the rise of USD-pegged stablecoins as a key reason for expediting the digital euro’s launch. Amid the growing de-dollarization discussions, the digital euro might serve as a prospective alternative to the U.S. dollar.

On August 22, 2025, it was revealed that to hasten the digital euro’s rollout, the EU is contemplating the use of a public blockchain, specifically Ethereum and Solana, as opposed to a central bank-controlled private blockchain.

This move has drawn criticism from the crypto community. Many commenters opine that, should the digital euro be deployed on public platforms like Solana or Ethereum, it would represent a subpar version of a CBDC. Transaction data would be visible on public blockchains while the central bank would exert even greater dominion over transaction details.

Although several euro-pegged stablecoins exist, they collectively account for merely 0.2% of the total stablecoin market. Given Europe’s lack of engaging products like Meta or WeChat that could significantly enhance the adoption of euro stablecoins, it remains uncertain how competitive they can be in the ongoing landscape.

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