Stablecoin Dilemma: Non-US Economies Face Dollar Dependency Challenge

Gate News reports that as the issuance of Hong Kong’s first stablecoin licenses approaches the deadline, the authorities have yet to announce the results, sparking discussions about the development challenges of stablecoins outside the U.S. Terminal 3 co-founder Liu Jiawei and Shanghai Jiao Tong University economist Liu Xiaochun discussed in the South China Morning Post that the legalization of U.S. dollar stablecoins has complex global effects, solving cross-border payment friction but deepening reliance on the U.S. dollar system.

Liu Jiawei believes the GENIUS Act opens the door for institutional capital but also pressures countries seeking to build parallel financial systems as the window for such opportunities rapidly closes. Liu Xiaochun pointed out that the U.S. allows private stablecoins to be legal but restricts central bank digital currencies (CBDCs), aiming to protect crypto supporters’ interests. He compares stablecoins to checks or casino chips, as they still need to be exchanged for fiat currency for settlement.

In practice, workers in Turkey, Nigeria, and Argentina use dollar stablecoins to hedge against local currency devaluation. Tech companies use stablecoins to pay overseas developers, and sanctioned countries’ merchants also use stablecoins to bypass banking systems. This illustrates the dilemma faced by emerging market regulators in balancing the convenience of stablecoins with the structural advantages of the dollar.

The Hong Kong Monetary Authority has reviewed 36 applications under the Stablecoin Ordinance, with HSBC, Standard Chartered joint ventures, and OSL Group shortlisted. The regulatory approach favors a bank-led issuance model, emphasizing institutional credibility over speed. Ant Group and JD.com withdrew their applications due to mainland policy pressures, showing that under the “one country, two systems” framework, Hong Kong still faces limitations.

Both experts agree that Hong Kong’s stablecoin plan—regulated, bank-led, pegged to the Hong Kong dollar and linked to the U.S. dollar—has practical value. However, the global liquidity landscape is changing rapidly. The GENIUS Act is reshaping the stablecoin ecosystem, Russia is exploring issuing stablecoins, and the EU is promoting the development of alternative currencies within the eurozone. Non-U.S. economies must accelerate their strategies within this window or risk being locked into the U.S. dollar system.