Stablecoin War 2.0 — Dollar, Yuan, Euro in a Digital Cold War

🔑 Key Takeaways

Stablecoins are no longer “crypto plumbing” but instruments of statecraft. USDT/USDC anchor dollar hegemony, Hong Kong’s RMB offshore stablecoins open Beijing’s controlled channel, and MiCA creates euro-denominated tokens.
With the Hong Kong Stablecoin Ordinance (effective Aug 1, 2025), 77 firms have expressed interest; only a few will get licenses. Analysts see it as an “offshore valve” for RMB internationalization.
The BIS warns stablecoins fail the tests of singleness, elasticity, and integrity, and pushes its unified ledger blueprint as the state’s answer.
CryptoQuibbler notes: the true battlefield is not exchange tickers but law, diplomacy, and settlement infrastructure.

CryptoQuibbler illustration of a futuristic digital world map with dollar, yuan, and euro stablecoins glowing like rival forces, symbolizing a global currency cold war.

🗞 Main Story

Stablecoins in 2025 are no longer just liquidity tools for exchanges—they have become the frontlines of monetary geopolitics. To understand this, one must recall the longer arc of monetary history.

1) The Dollar’s Legacy: Bretton Woods → Nixon Shock → Eurodollar

The 1944 Bretton Woods system tied currencies to the dollar, and the dollar to gold. In 1971, Nixon suspended gold convertibility, shattering the system. Yet paradoxically, this “Nixon Shock” entrenched the dollar: floating exchange rates and deep U.S. capital markets created even more global demand. Meanwhile, the Eurodollar market in London—offshore dollar deposits—expanded the dollar’s reach beyond Washington’s direct control. Trust in the dollar’s settlement role became habit, not treaty.

2) The Promise and Fracture of Stablecoins

From 2014–2018, USDT and later USDC offered crypto a “synthetic dollar” with immediate transferability. Markets scaled exponentially. But the 2022 collapse of TerraUSD (UST) reminded everyone of the structural divide: algorithmic models versus fiat-backed redemption. Trust rests not in code but in reserves and redemption rights. This lesson set the stage for global regulators to step in.

3) The Regulatory Era: MiCA in Europe, Stablecoin Ordinance in Hong Kong

Europe’s MiCA regulation introduced strict categories: ART (asset-referenced tokens) and EMT (e-money tokens). From June 30, 2024, issuers must comply with redemption, disclosure, and reserve rules. The EU wants euro-denominated tokens issued by banks and fintechs to prevent dollar stablecoins from dominating European rails.

Hong Kong, meanwhile, activated its Stablecoin Ordinance on Aug 1, 2025. Within weeks, the HKMA announced 77 expressions of interest across banks, fintechs, and Web3 startups. But officials stress: interest is not approval. Only a handful will win initial licenses, forming a “gold-plated club” of issuers. Analysts believe this could create offshore RMB stablecoins—a way to internationalize the yuan without opening the mainland’s capital account.

4) e-CNY and Hong Kong: The “Controlled Leak” Strategy

Hong Kong’s role is not just regulatory but geopolitical. In 2024, cross-boundary pilots allowed Hong Kong residents to open e-CNY wallets, top up via FPS, and use digital yuan for retail payments. The experiment creates a controlled offshore channel for RMB. Stablecoins add a new rail: programmable, offshore, but still under Beijing’s watch. In Song Hongbing’s words from Currency Wars, currencies are weapons, and this is a precision-guided leak valve into global trade.

5) The BIS Strikes Back: “Stablecoins Cannot Replace Central Bank Money”

The Bank for International Settlements (BIS) in 2025 declared stablecoins fail the tests of singleness (1:1 parity), elasticity (supply responsiveness), and integrity (legal certainty). Its alternative: a unified ledger that combines central bank reserves, commercial bank deposits, and tokenized government securities into one programmable platform. Translation: the state intends to keep its grip on money, even in a tokenized era.

In short, the battlefield is not “which stablecoin has higher market cap” but “which nation controls the rails where settlement happens.” CryptoQuibbler’s analysis: the prize is not price, but trust institutionalized.

🔬 Expert Opinions

Hyun Song Shin, BIS Chief Economist: “Stablecoins fall short on singleness, elasticity, and integrity. The unified ledger offers a state-backed path.”
ESMA/EBA, EU regulators: “MiCA’s ART and EMT provisions take effect June 30, 2024—mandatory redemption, disclosure, and reserve standards.”
Eddie Yue, HKMA Chief Executive: “Cross-boundary e-CNY pilots now allow Hong Kong residents to open wallets and fund them via FPS.”
Senior HKMA official (public briefing): “Licenses will be scarce. Strong KYC and holder identification are required.”
Eswar Prasad, Cornell University: “Digital money could reshape even reserve currency status. Stablecoins are accelerants in this transition.”

🌟 Implications

Digital Cold War, Visible Rails

Dollar stablecoins ride inertia and liquidity; RMB offshore coins act as controlled internationalization; euro tokens try to reclaim sovereignty through regulation. The question is not token supply but which rail processes settlement.
Liquidity Fragmentation vs. Interoperability

Multiple regional stablecoins risk splintering liquidity pools. The BIS insists singleness—all forms of money exchanging at 1:1—is essential to prevent systemic cracks.
Policy Spillover: KYC-by-Design

Hong Kong’s approach requires holder-level identification for stablecoins. This raises adoption prospects but curtails privacy. Compliance is the ticket to legitimacy.
Investor Playbook

For traders and institutions, the calculus shifts: not just “which stablecoin is safer,” but “which nation stands behind it.” Jurisdiction, reserves, and sanctions risk all matter.

CryptoQuibbler visual of Hong Kong skyline at night with neon token flows of dollar, yuan, and euro arcing across the harbor, representing regulated cross-border rails.

📝 Editorial Opinion

📖 From Currency Wars to Stablecoin Wars

Song Hongbing argued that financial empires are forged not by tanks but by trust in money. Stablecoins embody that thesis—they are programmable trust tokens, projected across borders as instruments of influence.

⚔️ Dollar vs. Yuan vs. Euro

Dollar: USDT/USDC dominate with deep capital markets and network effects. Inertia is power.
Yuan: The offshore gambit via Hong Kong—a “controlled leak” to expand RMB usage without losing capital account discipline.
💡 The Illusion of Neutral Tech

Crypto maximalists once claimed “code is law.” But in the stablecoin battlefield, law is law—and law belongs to sovereigns. Every token carries not only collateral but a flag.

⚖️ CryptoQuibbler Verdict

The trophy of this war is not speculative profit but the settlement of economic life itself. The decisive factor will be who institutionalizes trust—through regulation, redemption, and rails. Stablecoins are not neutral—they are nation-branded instruments in a digital cold war.

📘 Key Term Explanations
- MiCA (EU): Markets in Crypto-Assets regulation. ART/EMT stablecoin rules took effect June 30, 2024.
- Stablecoin Ordinance (HK): Effective Aug 1, 2025. Requires HKMA licensing for fiat-linked stablecoins.
- e-CNY Cross-Boundary Pilot: Hong Kong residents allowed to open e-CNY wallets and fund via FPS, expanding offshore RMB usage.
- Singleness of Money: Principle that all units of a currency must be interchangeable 1:1. BIS warns stablecoins undermine this.
🛬 Sources
- HKMA – Stablecoin Ordinance (Aug 2025) and licensing guidance.
- The Standard / Reuters – 77 EOIs, few licenses expected.
- ESMA/EBA – MiCA ART/EMT provisions (effective June 2024).
- FT / Reuters – RMB internationalization, Hong Kong testbed.
- BIS – Stablecoin limitations, unified ledger proposal.
- SCMP / Reuters – e-CNY pilot expansion in Hong Kong.
- CoinDesk / academic reports – TerraUSD collapse and structural lessons.
- Federal Reserve history – Bretton Woods, Nixon Shock context.
- IMF / academic research – Eurodollar market origins.

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