Gary Liu and Liu Xiaochun on What Role Stablecoins Could Play in China and the US

Why It Matters

Regulatory clarity in the U.S. and Hong Kong unlocks large‑scale institutional use of stablecoins, accelerating dollar‑dominant digital payments and reshaping global finance.

Key Takeaways

• Stablecoins cut cross‑border payment fees and settlement time.
• Global remittances cost $50‑100 billion annually, stablecoins can reduce them.
• US Genius Act legalizes dollar‑stablecoins, unlocking institutional adoption.
• Hong Kong’s licensing framework positions the city as a digital‑asset hub.
• AI agents will rely on stablecoins for trillion‑dollar transaction volumes.

Pulse Analysis

Stablecoins are poised to overhaul the cross‑border payment ecosystem by offering near‑instant settlement and dramatically lower transaction costs. Traditional remittance corridors, which move roughly $1 trillion a year and charge up to 6% in fees, could see costs shrink to a fraction of current levels, especially in high‑fee corridors like Hong Kong‑to‑Philippines. As generative AI agents scale, their need for rapid, programmable value transfer will make stablecoins the preferred settlement layer for everything from procurement to micro‑services, driving transaction volumes into the trillions of dollars.

The U.S. Genius Act, enacted in July 2025, marks a watershed moment by formally recognizing dollar‑backed stablecoins as legal tender for regulated entities. This regulatory certainty has already triggered a 20% surge in stablecoin market capitalisation, inviting major asset managers and banks to integrate these tokens into treasury operations, liquidity management, and client services. By anchoring to the U.S. dollar, stablecoins reinforce dollar hegemony while providing a bridge between decentralized finance and traditional finance, a balance that China’s more prohibitive stance deliberately avoids.

Hong Kong’s forthcoming stablecoin issuer licences illustrate a pragmatic "one country, two systems" approach, positioning the city as a compliant hub for global digital‑asset flows. The licensing regime will enforce KYC, AML, and security standards, attracting fintech firms seeking a regulated environment that still benefits from the Hong Kong dollar’s peg to the U.S. dollar. As institutions adopt stablecoins for payments, remittances, and AI‑driven commerce, Hong Kong could become the gateway for Asian markets to access efficient, dollar‑denominated digital liquidity, while also providing a testbed for future mainland innovations.