The Potential Impact of Stablecoins on the Financial System

Stablecoins are a type of cryptocurrency that is pegged to specific assets (usually fiat currencies). They serve as a bridge connecting decentralized financial systems and traditional financial systems, and are an important infrastructure for decentralized finance. Recently, the United States and Hong Kong followed the European Union in passing stablecoin regulation legislation, marking the formal establishment of a regulatory framework for stablecoins in some major regions around the world. This brings opportunities for the development of decentralized finance, while also potentially deepening its integration with traditional financial systems, posing new challenges and risks to the global financial system.

Summary

Milestone in Cryptocurrency Regulation

Recently, the United States passed the first bill to establish a regulatory framework for stablecoins, filling a regulatory gap in this area. Hong Kong, China also followed closely with a similar bill, which helps to consolidate its position as an international financial center. Following the European Union, the United States and Hong Kong have launched regulatory frameworks for stablecoins, marking an important step for the integration of cryptocurrency into the mainstream financial system.

From "barbaric growth" to regulated development

The new bill establishes a series of regulations targeting the risk points that have previously emerged in the industry, including transparency of reserve assets, liquidity management, algorithmic stablecoin risks, anti-money laundering, and more. The bill references the regulatory framework of traditional financial institutions but is stricter in liquidity management, requiring 100% reserves. The regulatory positioning of stablecoins is "on-chain cash" rather than "on-chain deposits," to strengthen the foundation of the decentralized financial system.

The impact of stablecoins on the financial system

By the end of May 2025, the market capitalization of mainstream stablecoins is expected to be around $230 billion, growing rapidly but still small in scale. In terms of trading volume, the annual trading volume of mainstream stablecoins reaches $28 trillion, surpassing major credit card organizations. With the improvement of regulatory frameworks, stablecoins are expected to play a greater role in international payments.

Main Text

a more efficient means of international payment

Compared to traditional cross-border payments, stablecoin payments have lower fees and faster speeds. However, as regulation becomes more standardized, compliance costs may increase. In the long term, the share of stablecoins in international payments is expected to rise, but regulatory requirements still need to be balanced.

full reserve constrained currency creation

The 100% reserve requirement restricts the credit expansion capacity of stablecoin issuers. The issuance of stablecoins theoretically does not directly affect the money supply, but it may lead to changes in the deposit structure. Crypto lending platforms can increase the scale of "quasi-money", but the current scale is limited.

challenges to bank deposits

Stablecoins may cause financial disintermediation, leading to deposit outflows. Although the current impact is limited, there is a long-term risk of rapid expansion in scale and indirect profit acquisition. Traditional banks are also exploring countermeasures, such as issuing their own digital currencies.

Absorb the impact of government debt

Stablecoin issuers have become important buyers of U.S. Treasury bonds, which may increase the demand for short-term U.S. Treasuries. This could affect the transmission of monetary policy, and central banks may need to adjust accordingly.

###'s impact on the financial market

Stablecoins influence the financial market through channels such as the price volatility of crypto assets, market sentiment, and the stock prices of related listed companies.

Potential Reconstruction of the International Monetary Order

The impact of stablecoins on the status of the US dollar is contradictory. On one hand, they reinforce the dominance of the dollar, while on the other hand, they may also serve as a bridge to a diversified international monetary system. They pose a challenge to the currencies of emerging economies.

###'s insights on the internationalization of currency

The Hong Kong stablecoin bill helps enhance the international influence of the Hong Kong Dollar and provides a "testing ground" for the internationalization of other currencies. However, attention must still be paid to financial stability risks, and policies should be adjusted in a timely manner.

Risk Warning

1. Risks in the Development of the Cryptocurrency Industry
2. The impact of stablecoins on the traditional financial system exceeds expectations.
3. Regulatory policies are not advancing as expected.

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