Trump's hidden agenda is becoming apparent.

Author: Dong Bizheng; Source: Huxiu APP

On May 19, the U.S. Senate passed the GENIUS Act, legislating on stablecoins. Shortly after, on May 21, the Hong Kong Legislative Council passed the Stablecoin Regulation Bill.

In just 48 hours, legislation surrounding stablecoins, or rather their legalization, has been put on the agenda, and a war without gunpowder has quietly begun.

Stablecoins can be understood as the mapping of real fiat currencies in the virtual world.

Similar to the real world, major powers are trying to evolve their virtual currency systems dominated by stablecoins into an existence similar to the Bretton Woods system.

Behind this, what major powers seek to compete for is the discourse power of global currency expansion.

So, what exactly is a stablecoin?

1. Shadow "Fiat Currency"

To understand why stablecoins exist, we first need to reiterate the process of the establishment of dollar hegemony.

The reason why the US dollar has gradually become a global universal currency is that: initially, the dollar was pegged to stable gold, and various national currencies were pegged to the dollar, forming the Bretton Woods system; subsequently, although the dollar decoupled from gold, it first occupied the discourse power of consumption and trade, tied itself to oil, thus consolidating the dollar's hegemonic position.

In the 1970s, the United States reached agreements with major oil-exporting countries like Saudi Arabia to price and settle oil transactions in US dollars.

In addition, after World War II, the United States became the world's most powerful economy. As one of the largest consuming countries globally, the U.S. also needs to "supply" dollars to the world, which requires using dollars for settlement to meet global demand for dollars—other countries often earn dollars through exports and then flow those dollars back to the U.S. to purchase U.S. Treasury bonds, stocks, and other assets, forming a "dollar cycle."

Therefore, changes in U.S. monetary policy will affect the economies of these countries. For example, the Federal Reserve raised interest rates multiple times from the end of 2015 to 2018, leading to increased capital outflow pressure in emerging market countries. Some companies faced high interest expenses on dollar-denominated debt, resulting in increased financial pressure on businesses, and some companies had to reduce their investments and production scale.

For the virtual world economy to have value, it must be anchored to the economic system of the real world, and currency is a crucial link. Stablecoins have emerged as a result.

Stablecoins act like a bridge on the blockchain, connecting the worlds of traditional fiat currency and cryptocurrencies. Because stablecoins have a stable value, they typically peg their value to familiar fiat currencies such as the US dollar or Hong Kong dollar, avoiding the extreme volatility seen with Bitcoin.

Therefore, stablecoins possess the monetary attributes of value storage, transaction medium, and pricing tool. However, stablecoins are not a risk-free technological innovation. Their value relies entirely on the support of reserve assets, and if the issuer "misappropriates funds" or if there are issues with the reserve assets, problems could arise.

The United States was the first to recognize the value of stablecoins as a new tool for global expansion. This makes it extremely critical to determine which country's underlying currency the stablecoins are anchored to. This will also become the cornerstone of constructing a new blueprint for the global digital economy, evolving into a Bretton Woods-like system for a virtual economic world.

Countries and companies are also racing to seize opportunities.

In addition to the relevant laws introduced by Hong Kong, China and the United States, on April 28, 2025, payment giant Mastercard (Mastercard) announced that Mastercard allows customers to spend in stablecoins and allows merchants to settle in stablecoins. Another payments giant, PayPal, is ramping up to grow its stablecoin PYUSD market.

2. A new round of competition

The simultaneous introduction of the U.S. "GENIUS Act" and the Hong Kong "Stablecoin Regulation Draft" marks a new phase in the global regulatory competition for stablecoins, officially making stablecoins a political tool.

The essence of this legislative showdown is the struggle for the reconstruction of monetary power in the digital age.

On the surface, the United States is establishing a regulatory framework for stablecoins, but in reality, it is allowing stablecoins to take over the "abandoned" U.S. Treasury bonds to consolidate the dollar's hegemony.

The "GENIUS Act" mandates that stablecoins be 100% backed by cash, demand deposits, or short-term U.S. Treasury reserves, essentially deeply binding stablecoins to U.S. Treasuries.

Sima Zhao's intentions are known to all.

In this way, stablecoins are expected to become potential buyers of U.S. Treasury bonds to save their declining trend. The U.S. can still reap benefits globally. If U.S. Treasury bonds face significant defaults, stablecoins pegged to them will also depreciate or decouple.

Miaotou pointed out in an article titled "Trump is Being Held Hostage by US Bonds" that due to the overextension of US dollar credit, the capital market no longer regards US bonds as a "safe haven."

The United States frequently uses the hegemony of the dollar as a means of attack, interfering with and damaging the economies of other countries through sanctions, asset freezes, and other methods. Especially during the Russia-Ukraine conflict, the U.S. froze Russia's foreign exchange reserves, directly exacerbating the global trust crisis in the dollar, leading many countries with trade surpluses with the U.S. to begin "abandoning" U.S. Treasuries.

The U.S. national debt has already exceeded $36 trillion, and its debt-to-GDP ratio exceeds 120%. Analyst Larry McDonald pointed out that if interest rates remain at 4.5%, the U.S. debt interest bill could reach $1.2 trillion to $1.3 trillion by 2026, exceeding defense spending, and the U.S. fiscal deficit will be overwhelmed.

China is also using Hong Kong as a bridgehead to test the value of stablecoins. Compared to US dollar stablecoins, the stablecoins in Hong Kong are more flexible, being able to anchor to a single fiat currency or a basket of fiat currencies, without a clear specification on the usage of the underlying funds.

The U.S. "GENIUS Act" defines "payment stablecoins" as not bearing interest, emphasizing their non-security nature, which limits the scope for yield innovation in stablecoins.

Generating interest is an important means of attracting potential customers.

The Hong Kong stablecoin has not yet restricted interest income and anchoring structure, providing greater flexibility and attractiveness for financial institutions in stablecoin product innovation and yield design.

In addition, the expansion of use cases for stablecoins is also a battleground that must be fought over.

Currently, major domestic internet companies have "entered the game," not only creating application scenarios for stablecoins but also competing for payment gateways in the Web3 era.

Currently, the domestic market is still in the stage of technological experimentation and regulatory adaptation, and certain achievements have been made.

On May 23, Liu Peng, CEO of JD Coin Chain Technology, stated that the JD stablecoin has entered the second phase of sandbox testing, which will provide mobile and PC application products for both retail and institutional users. The testing scenarios mainly include cross-border payments, investment transactions, and retail payments.

Through the new energy RWA project, Ant Digital explores the binding of stablecoins and physical assets. Under the guidance of the Hong Kong Monetary Authority's Ensemble Sandbox project, Ant Digital supported LongShine Group, a listed new energy company in mainland China, to complete its first RWA cross-border financing, with an amount of approximately RMB100 million.

Of course, this is not enough. More practical scenarios are needed to encourage users to choose the Hong Kong stablecoin. After all, with digital cryptocurrency trading, the US dollar stablecoin has a slight advantage.

Next, the internationalization of the renminbi, the hegemony of the dollar, and another battle; this legislation is just a preliminary skirmish.

3. Conclusion

When 36 trillion US dollars flow into the blockchain through USDT, and Hong Kong uses the Hong Kong dollar stablecoin to leverage cross-border payments, the key to personal wealth has already been embedded in the underlying logic of national games.

The key to winning or losing this game may lie in the code of the JD Sandbox test or in the US Treasury holdings of USDC reserves.