Stablecoins have rapidly evolved from niche digital assets into a cornerstone of the global financial infrastructure. Since Circle — often dubbed the "first stablecoin stock" — went public on the New York Stock Exchange (NYSE: CRCL), its stock has surged over 700%, capturing investor attention and fueling momentum in related概念股 (concept stocks) across global markets. This explosive growth isn’t just a market anomaly; it reflects a broader shift toward tokenized finance, regulatory clarity, and real-world utility.
But what exactly are stablecoins? Why are tech giants like Alibaba and JD.com racing to enter this space? And how do they differ from central bank digital currencies like China’s digital yuan?
Let’s dive deep into the mechanics, momentum, and future potential of stablecoins in 2025.
What Are Stablecoins and How Do They Work?
Stablecoins are a type of cryptocurrency designed to maintain a stable value by being pegged to an underlying asset, typically fiat currencies like the U.S. dollar or Hong Kong dollar. Unlike volatile cryptocurrencies such as Bitcoin or Ethereum, stablecoins aim to eliminate price swings, making them ideal for transactions, savings, and cross-border remittances.
There are four primary types of stablecoins:
- Fiat-collateralized: Backed 1:1 by reserves of traditional currency. Examples include USDC (issued by Circle) and USDT.
- Crypto-collateralized: Secured by other digital assets like ETH through smart contracts. DAI is a leading example.
- Algorithmic: Use code-based mechanisms to adjust supply and maintain price stability. These carry higher risk due to reliance on market dynamics rather than tangible reserves.
- Commodity-backed: Tied to physical assets like gold or oil, offering exposure to commodity prices with blockchain efficiency.
Their most powerful use case lies in DeFi (decentralized finance), where stablecoins serve as the backbone for lending, borrowing, yield farming, and trading. They act as reliable units of account and value transfer within blockchain ecosystems.
Regulatory Milestones Driving Market Confidence
Recent regulatory developments have been pivotal in legitimizing stablecoins as part of mainstream finance.
In June 2025, the U.S. Senate passed the GENIUS Act (Guidance and Establishment of National Innovation for U.S. Stablecoins), establishing a clear legal framework for dollar-backed stablecoins. Key provisions include:
- Issuers must hold banking or payment licenses.
- Full 1:1 reserve requirements in cash or highly liquid assets.
- Monthly public audits of reserves.
This legislation signals strong federal support and aims to protect consumers while fostering innovation.
Meanwhile, Hong Kong’s Stablecoin Ordinance will take effect on August 1, 2025. It mandates that any entity issuing fiat-backed stablecoins — especially those pegged to the Hong Kong dollar — must obtain a license from the Financial Secretary. The move positions Hong Kong as a regulated hub for digital asset innovation in Asia.
These twin regulatory milestones are widely seen as catalysts behind the recent surge in stablecoin-related equities and investor sentiment.
Market Growth and Future Outlook
The stablecoin market has grown exponentially. From around $20 billion in 2020, total market capitalization now exceeds **$250 billion** as of mid-2025 — an 11-fold increase in just five years, with a compound annual growth rate (CAGR) above 80%.
Currently, stablecoins represent about 7.5% of the total crypto market cap (~$3.3 trillion). According to analysis by Guosen Securities, under moderate growth assumptions, the stablecoin market could reach:
- $1.1 trillion by 2028
- $2.5 trillion by 2030
This trajectory suggests stablecoins are transitioning from speculative tools to essential financial infrastructure.
Stablecoins vs. Digital Yuan: Key Differences
Many confuse stablecoins with digital yuan (e-CNY), China’s central bank digital currency (CBDC). While both operate digitally, their structures and purposes differ fundamentally.
| Aspect | Digital Yuan | Stablecoin |
|---|---|---|
| Issuer | People's Bank of China (central authority) | Private entities (e.g., Circle, Tether) |
| Backing | Sovereign credit | Reserves (cash, bonds, crypto) |
| Regulatory Status | Legal tender with full legal tender status | Regulated financial instruments (under new frameworks) |
| Interest-bearing? | No (replaces M0 cash) | Generally no |
| Technology | Hybrid blockchain/distributed ledger | Primarily blockchain-based |
As noted in a report by Shenwan Hongyuan, China prohibits private issuance of digital tokens, reserving that role for the central bank. In contrast, licensed private firms can issue stablecoins under emerging regulations in jurisdictions like Hong Kong.
While digital yuan enhances domestic payment efficiency and monetary control, stablecoins offer greater flexibility in cross-border transactions and integration with decentralized applications (dApps).
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A critical point often misunderstood: stablecoins are not investment vehicles. As Hong Kong Monetary Authority (HKMA) Chief Executive Eddie Yue emphasized, stablecoins are payment tools, not assets meant for speculation.
Unlike stocks or cryptocurrencies, they don’t appreciate in value. Their purpose is to enable fast, low-cost transfers — especially across borders.
Consider this: traditional international wire transfers take days and cost up to 10% in fees. With stablecoins, settlement can occur in seconds at less than 1% cost.
JD.com founder Richard Liu revealed that the company is pursuing stablecoin licenses in major currency zones to build a global corporate exchange network. The goal? Reduce cross-border payment costs by up to 90% and settle transactions in under 10 seconds.
Similarly, Ant International is advancing its global treasury solutions using AI, blockchain, and stablecoin innovations. Once Hong Kong’s licensing regime opens, Ant plans to apply immediately to support the city’s ambition as a top-tier international financial center.
Frequently Asked Questions (FAQ)
Q: Are stablecoins safe?
A: Safety depends on transparency and regulation. Regulated stablecoins like USDC publish monthly attestation reports verifying full reserves. However, algorithmic or unregulated versions carry higher risks.
Q: Can I earn interest on stablecoins?
A: While stablecoins themselves don’t pay interest, you can lend or stake them in DeFi platforms or centralized services to generate yield — though this involves counterparty risk.
Q: Could stablecoins replace traditional banking?
A: Not fully — but they’re becoming a parallel system. Stablecoins excel in speed and cost-efficiency, especially for cross-border payments, but lack deposit insurance and consumer protections found in traditional finance.
Q: Is there a risk of capital flight due to stablecoins?
A: Yes — the Bank for International Settlements (BIS) warns that unrestricted stablecoin adoption could threaten monetary sovereignty, particularly in emerging economies where citizens might shift savings into dollar-backed tokens.
Q: Will we see RMB-backed stablecoins soon?
A: Possibly. Although mainland China restricts private token issuance, Hong Kong’s new ordinance doesn’t exclude renminbi-pegged stablecoins. With offshore RMB deposits reaching ~1.7 trillion yuan in Q1 2025, an offshore RMB stablecoin could support internationalization efforts.
The Road Ahead: Three Phases of Stablecoin Adoption
According to Huatai Securities, stablecoin demand will evolve through three phases:
- Chain-native liquidity ("on-chain cash"): Fueling crypto trading and DeFi activities as digital dollars on blockchain rails.
- Global payment rails: Transforming cross-border remittances and B2B settlements with near-instant settlement and minimal fees.
- Ecosystem integration: Expanding into social media, gaming, NFTs, and decentralized identity — becoming embedded in everyday digital life beyond finance.
Already, platforms like “Cross-Border Payment Connect” — launched June 22, 2025 — enable real-time fund transfers between mainland China and Hong Kong. This paves the way for regulated RMB-denominated digital assets operating offshore.
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Final Thoughts
Stablecoins are no longer fringe experiments. Backed by clearer regulations in the U.S. and Hong Kong, embraced by internet giants like JD and Ant Group, and integrated into real-world financial workflows, they’re becoming a vital layer of modern finance.
From reducing global remittance costs to enabling programmable money in Web3 ecosystems, stablecoins represent more than technological novelty — they signal a structural shift in how value moves across borders and blockchains.
As adoption accelerates through 2025 and beyond, one thing is clear: whether you're an investor, business leader, or consumer, understanding stablecoins is key to navigating the future of money.