Zhang Ming from the Chinese Academy of Social Sciences: We should pay close attention to the development situation of global stablecoins

Currently, stablecoins have become a medium of exchange, a measure of value, and even a store of value in the virtual world. The development of US dollar stablecoins may enhance the dollar's position in the global currency landscape. Other countries should pay close attention and respond actively.

Recently, the global stablecoin (Stablecoin) development momentum has been rapid, attracting attention from all sectors. Currently, the global stablecoin market is valued at approximately $250 billion, with over 95% being dollar-pegged stablecoins. Among dollar stablecoins, the most important are Tether (USDT) and USD Coin (USDC), which together account for about 90% of the global stablecoin market share. Recently, the European Union, the United States, and Hong Kong have successively introduced legislation regarding stablecoins. Below, the author analyzes the development trends, prospects, and impacts of global stablecoins.

First, stablecoins have developed into a medium of exchange connecting virtual assets and real assets. Currently, the development of cryptocurrencies and crypto assets is exceptionally rapid worldwide. Many investors often choose to convert their cryptocurrencies and crypto assets into stablecoins when cashing out, as this involves simple exchange processes, low conversion costs, and minimal exchange rate risks (crypto assets and cryptocurrencies are usually priced in dollars), and is widely recognized by other investors. Against this backdrop, some institutions have begun to provide financing for stablecoins, leading to the formation and continuous growth of the stablecoin lending market.

Second, the payment and exchange between stablecoins and various currencies in the real world are very convenient. Unlike the significant daily price fluctuations of Bitcoin, stablecoins are usually pegged to the dollar at a 1:1 ratio, making exchanges with both dollars and other currencies very convenient, essentially referencing the real-time exchange rates between the dollar and other currencies. Interestingly, researchers have found that, in many cases, the exchange rate of dollar stablecoins to other currencies is actually slightly higher than the exchange rate of dollars to other currencies, and this price difference is seen as a "premium" assigned to stablecoins by investors, indicating that holding dollar stablecoins may be more convenient than holding dollars in certain situations.

Third, stablecoins have begun to replace local currencies in some countries. In countries where domestic inflation is severe, local currencies face significant devaluation risks, and residents find it difficult to obtain dollars through formal channels (such as Nigeria and other African countries), dollar stablecoins have started to be viewed as hard currency for circulation. Since obtaining dollar stablecoins through internet channels is easier than obtaining dollars through other means, dollar stablecoins have become a practical choice for holding dollars in these countries and a new vehicle for "dollarization."

Fourth, stablecoins have become an important vehicle for the tokenization of real-world assets (Real World Assets, RWA). RWA is currently one of the hottest emerging concept assets, referring to the transfer of traditional asset securitization business to the online virtual world and issuing through tokenization. For example, real estate, financial assets, infrastructure, and other assets can be transformed into RWA. The biggest difference between RWA and traditional securitization is the ability to be infinitely divisible, meaning investors can purchase very small proportions of RWA, which undoubtedly enhances the liquidity of RWA In the current issuance process of RWA, the vast majority choose to use US dollar stablecoins as the pricing scale and trading medium.

Overall, stablecoins have already played the roles of trading medium, pricing scale, and even storage means in the virtual world. Since the proportion of US dollar stablecoins is significantly higher than that of the US dollar in global currency usage, the development of the stablecoin market is likely to re-enhance the position of the US dollar in the global monetary system.

For example, since the Trump administration sparked a new round of trade wars in 2025, the US Treasury bond market has experienced frequent turbulence in April and May, with long-term US Treasury bond yields soaring multiple times. The underlying reasons include worsening US inflation expectations, increasing market concerns about the sustainability of US fiscal debt, and a decline in the reputation of US Treasury bonds as a safe asset, which has significantly reduced the willingness of traditional sovereign investors to purchase US Treasury bonds.

However, if a private institution wants to issue US dollar stablecoins, it must purchase a large amount of stable US dollar assets as collateral, with US Treasury bonds being the preferred choice for such institutions. If the US dollar stablecoin market expands significantly in the future, it will create new demand for US Treasury bonds. In other words, over time, the issuing institutions of US dollar stablecoins will gradually fill the gap left by sovereign investors reducing their holdings of US Treasury bonds.

In summary, the development of US dollar stablecoins can enhance the position of the US dollar in the virtual world on one hand, and on the other hand, it will increase the demand for US dollar assets, especially US Treasury bonds, which may overall help consolidate the position of the US dollar in the current international monetary system. Other countries should pay close attention to the development of US dollar stablecoins and quickly develop their own stablecoins or central bank digital currencies to ensure they do not fall behind in the wave of digital currency competition.

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