#stablecoins

#stablecoins

China has been expanding use of digital currencies as it promotes wider use of its yuan, or renminbi, to reflect its status as the world's second-largest economy and challenge the overwhelming sway of the U.S. dollar in international trade and finance. However, restrictions on access to Chinese financial markets and limits on convertibility of the yuan, or "people's money," are big obstacles blocking its global use.

The $250 billion stablecoin market, dominated by Tether's ($158 billion) and Circle Internet 's ( ) ($62 billion), is a cornerstone of global digital finance. These U.S. dollar-backed tokens power everything from DeFi to cross-border payments. But China is wary of U.S. financial dominance, and is eyeing a yuan-backed stablecoin to challenge this duopoly. With Hong Kong as a potential launchpad and China's digital yuan gaining traction, is this a game-changer or just geopolitical posturing? More importantly, should Tether and Circle Internet worry?

The growth of the market for tokenized assets has been far slower than expected in recent years, with many projects still in their infancy or not yet live.

Although they have comparatively few problems accessing overseas bank accounts-often in the Cayman Islands or Switzerland-in lieu of a US bank account, they are often unable to earn yield on deposits or transact seamlessly with US-based counterparties, and sometimes incur high account fees.

The GENIUS Act makes it law that permitted payment stablecoin issuers must hold reserves for every dollar of stablecoins offered, which can be any government-issued asset approved by regulators.

MiCA mandates that all crypto platforms in the EU must register and obtain a license, along with enforcing strict KYC and AML protocols for CASPs.

"I think that we are falling prey to some confusion between money, means of payment, and payment infrastructure, and that is accelerated..."

"The bank will be a national bank... providing traditional banking products, as well as virtual currency-related products and services, for businesses and individuals."

in just a few years, stablecoins transformed from fringe assets to pivotal components of the financial ecosystem, demonstrating their critical role in today's financial landscape.

Niknam believes US dollar stablecoins accessible through mobile phones will prove 'transformational for large groups of people' worldwide, particularly in countries suffering from currency instability.

Stablecoins are ready to power global payments and fintechs, however, single issuer stablecoins fail to create the network effect necessary for broader adoption.

Circle's IPO is generating excitement as it reflects the growing interest in stablecoins, which are pegged to real assets like the U.S. dollar and the euro.

Circle Internet Group's IPO aims to raise up to $624 million, seeking a valuation of $6.71 billion, amid rising interest in stablecoins.