Introduction to Stablecoins and Their Potential Impact on National Currencies
A lot has been said about the benefits of USD stablecoins for the US economy, particularly with the introduction of the Genius Act, which provides a clearer framework for issuers. However, the question remains whether other countries can also benefit from issuing stablecoins pegged to their respective national currencies. The answer is yes, and several countries are already exploring this option.
The rise of USD-pegged stablecoins has strengthened the US dollar, prompting other countries to consider issuing their own stablecoins to promote their local currencies. If the dominance of USD-pegged stablecoins is reduced, it could lead to a diversion of deposits from local banks. Japan and China are working on their national stablecoins, while the European Union is developing a Central Bank Digital Currency (CBDC) using Ethereum and Solana.
US Dollar Stablecoins as a Boost to the US Economy
The United States has rejected plans for a digital dollar issued by the central bank, citing data protection concerns. Instead, the government has encouraged private and public companies to issue stablecoins backed by real assets, typically the US dollar. Most stablecoins are pegged to the USD, with a value equivalent to one US dollar. Stablecoin issuers do not generate returns directly from the stablecoins but earn interest by holding US Treasury bonds that back these coins.
The Genius Act, signed by President Donald Trump on July 18, 2025, requires stablecoin issuers to support their coins with US dollars and T-Bills. This has created new growth opportunities for companies issuing stablecoins, as they need to buy American dollars and T-Bills to back their coins. The global demand for USD-pegged stablecoins is increasing, particularly in the global south, where local currencies are losing value against the USD.
According to Arthur Hayes, co-founder of BitMEX Exchange, the business model of stablecoin issuers like Tether is simple: they earn interest on the US Treasury bonds that back their coins. Hayes emphasizes that most countries, apart from China, use American social media apps, which could trigger larger capital outflows from the global south and increase demand for the US dollar if they start supporting stablecoin transfers.
China’s Efforts to Launch a Yuan-Pegged Stablecoin
China is one of the few countries with its own powerful social media giants, such as WeChat. Starting a yuan-pegged stablecoin could have a similar effect to the US, particularly given China’s export-driven economy. Stablecoins could become a more attractive instrument for international trade, offering fast and inexpensive transfers.
In 2021, China launched the Digital Yuan, a CBDC that failed to gain traction, losing to services like WeChat Pay and Alipay. In May 2025, Hong Kong introduced regulations for the issuance of stablecoins backed by Chinese assets. On August 20, it was reported that the State Council of China is working on introducing a yuan-pegged stablecoin for international trade.
Japan’s Plans for a Yen-Pegged Stablecoin
The Monex Group, a financial company based in Tokyo, announced ambitious plans to launch a yen-pegged stablecoin on August 26. Monex aims to replicate the US formula, supporting its coins with Japanese government invoices. The stablecoin is intended for cross-border transfers and corporate transactions. The project may receive a boost from Coincheck, a crypto exchange owned by the Monex Group.
European Union’s Efforts
Piero Cipollone, a member of the European Central Bank, cited the growing popularity of USD-pegged stablecoins as a reason for the introduction of a digital euro. The digital euro could be a potential replacement for the US dollar in the growing de-dollarization narrative. On August 22, 2025, it was reported that the EU is considering using a public blockchain, such as Ethereum or Solana, to accelerate the introduction of the digital euro.
The announcement was met with criticism from the crypto community, with some commentators arguing that the digital euro would be the worst variant of a CBDC if introduced on a public blockchain like Solana or Ethereum. There are already several euro-pegged stablecoins in circulation, but they make up only 0.2% of the entire stablecoin market.
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