The US and China are taking sharply different paths on stablecoins to set up a broader contest over how digital dollars and financial influence will evolve globally, according to industry experts featured in the South China Morning Post.
US, China Diverge on Stablecoins as Global Financial Stakes Rise
25 March 2026 - 13:00 CET
By Sandmark staff
The push from the US to formalize stablecoins through legislation such as the GENIUS Act is accelerating institutional adoption and reinforcing the role of the US dollar in digital finance. China continues to restrict cryptocurrency activity domestically while allowing Hong Kong to emerge as a controlled hub for regulated experimentation.
The divergence highlights how stablecoins are increasingly viewed as instruments of financial strategy and geopolitical leverage rather than a niche cryptocurrency tool. The policy split reflects deeper differences in how both countries view the role of digital assets in the global economy.
US doubles down on dollar-backed stablecoins
Proponents of the US approach argue that regulatory clarity is unlocking growth and cementing dollar dominance in digital markets. The legal recognition of stablecoins in the US could mark a turning point for the sector particularly as large financial institutions enter the market, according to Terminal 3 chief executive Gary Liu.
With roughly 99% of stablecoins currently denominated in US dollars, regulatory backing effectively extends the reach of the currency into blockchain-based finance.
Stablecoins are already widely used as settlement layers in cryptocurrency markets and are gaining traction in cross-border payments where they offer faster and cheaper alternatives to traditional systems. Their role could expand further as automation increases particularly with the rise of artificial intelligence-driven transactions.
China cautious with Hong Kong as testing ground
China has taken a more restrictive stance by emphasizing financial stability and risk control over rapid adoption. Stablecoins function primarily as payment tools rather than transformative financial instruments and operate similarly to cheques that ultimately require conversion into fiat currency, according to Shanghai Advanced Institute of Finance adjunct professor Liu Xiaochun in the recent SCMP discussion.
The digital assets see use in specific scenarios including cross-border trade, countries with volatile currencies and areas affected by sanctions, but their broader economic impact should not be overstated.
Hong Kong is expected to play a distinct role within the broader strategy of China. The city operates as an international financial centre under a separate regulatory framework and is preparing to issue its first stablecoin licences to position itself as a bridge between global digital asset markets and mainland oversight.
The contrasting approaches underscore a wider question of whether stablecoins will reinforce existing financial hierarchies led by the US dollar or gradually enable alternative systems to emerge. The balance currently appears tilted toward the US as regulatory momentum and market adoption continue to align in favour of dollar-backed digital assets.
