The Council on Foreign Relations warns that USD stablecoins could reshape global finance and weaken Beijing’s control.
China is preparing to counter with tightly monitored digital money designed to reinforce, not reduce, state authority.
USD Stablecoins and US Policy
The Council on Foreign Relations (CFR), a prominent US think tank on diplomacy and international politics, has raised alarms about stablecoin geopolitics. In a recent article, CFR scholar Zongyuan Zoe Liu argued that Washington’s new GENIUS Act transforms dollar-backed tokens into credible, regulated money.
With banks guaranteeing one-to-one redemption, stablecoins could soon sit alongside deposits and commercial paper as cash equivalents.
CFT notes that this credibility could drive explosive growth. Estimates suggest up to $1.75 trillion in stablecoins may circulate within three years. Meanwhile, the effects would reverberate far beyond crypto, strengthening the dollar’s global dominance.
Beijing’s Growing Anxiety
For Beijing, this shift is deeply unsettling. Stablecoins combine the liquidity of dollars with the portability of blockchain, bypassing conventional capital controls. Therefore, that undermines one of the Communist Party’s main economic and political power levers.
Export-oriented firms might eagerly adopt stablecoins to cut transaction costs. Notably, dollar tokens could be used daily, edging out the renminbi in key markets. CFR calls this risk “existential” for Chinese monetary sovereignty.
Chinese researchers echo the concern. Even state media have warned that dollar stablecoins could lock in US financial supremacy, undercutting years of Beijing’s effort to build renminbi-based alternatives.
Controlled Experiments Ahead
China’s record shows a preference for harnessing blockchain under tight state oversight. The central bank launched the e-CNY to preempt private tokens, but adoption has been sluggish. Alipay and WeChat Pay still dominate China’s digital payments.
Hong Kong has become a laboratory. New rules permit licensed issuers to launch fiat-backed stablecoins, including offshore renminbi versions. Such tokens allow controlled experimentation without loosening mainland capital restrictions.
Future renminbi stablecoins are expected to be programmable and fully traceable. This may help with anti–money laundering and expand financial surveillance. CFR concludes that Beijing will use stablecoins to encode state control, not dilute it.
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