Introduction
At the recent "Rapid Development of Stablecoins: Potential and Challenges" symposium hosted by the China Wealth Management 50 Forum (CWM50), Wanxiang Holdings Vice Chairman Xiao Feng delivered a groundbreaking keynote. He posited that stablecoins mark a transformative phase in monetary evolution—tokenized money—enabled by distributed ledger technology (DLT). This innovation facilitates peer-to-peer transactions without intermediary reconciliation, reshaping financial infrastructure and fueling the digital twin trend, where real-world assets undergo blockchain tokenization.
1. The Evolution and Technical Foundation of Stablecoins
Distributed Ledger Technology: A Computational Leap
Stablecoins emerge from DLT, representing humanity’s third computational method after single-entry bookkeeping (3000 BCE) and double-entry bookkeeping (~1300 CE). Bitcoin’s 2009 debut introduced distributed accounting, characterized by:
- Public ledger transparency: Global participants record transactions on one ledger, eliminating private reconciliations.
- Peer-to-peer efficiency: Direct transactions bypass intermediaries, reducing time/cost (e.g., remittances).
Digital Twins vs. Digital Natives
- Digital natives: Assets like Bitcoin/Ethereum created ex nihilo on-chain.
- Digital twins: Real-world assets (e.g., USD) tokenized on-chain (e.g., USDT, 2014). Recent Bitcoin ETF approvals bridge on/off-chain assets, showcasing DLT’s bidirectional value.
2. Stablecoins as Financial Market Infrastructure
Key Innovations:
- Decentralized settlement: Transactions settle instantly (trade-by-trade) versus traditional netting systems.
- 24/7 markets: Crypto exchanges (e.g., Hong Kong) operate nonstop, unlike NYSE/Nasdaq’s clearing halts.
👉 Explore how blockchain redefines financial infrastructure
3. Asset Tokenization (RWA): Phases and Significance
Three-Stage Progression:
- Fiat currency tokenization (e.g., USDT/USDC) – Simplest, legally backed.
- Financial asset tokenization (2023+) – Funds (BlackRock’s treasury tokens) gain liquidity.
- Physical asset tokenization (Future) – Real estate/hotels; challenged by off/on-chain binding (solutions like DePin immature).
Why Tokenize?
| Benefit | Description |
|---|---|
| Global liquidity | On-chain assets accessible worldwide (e.g., HKSE shares for Brazilian investors). |
| Efficient settlement | Peer-to-peer model boosts capital turnover (67x/year vs. banks’ 7–8x). |
| Programmability | Smart contracts automate processes (e.g., instant loan liquidation). |
| AGI-era readiness | Machine economies require programmable money. |
4. Stablecoins’ Monetary Attributes
Hybrid Nature:
- Legal attributes: Sovereign-backed value.
- Technical attributes: Programmability, cross-border fluidity (e.g., Africa’s unbanked use mobile wallets for USDT).
Cross-Border Impact:
- Financial inclusion: Solves the "last mile" (e.g., Kenyan mobile payments).
- Trade facilitation: Chinese e-commerce adopts USD stablecoins for faster C2B parcel trades.
5. The USD Stablecoin Strategy
Goals and Trends:
- Hegemony preservation: Extends USD dominance (gold → petro → token dollar).
- $20 trillion transactions (2024): Mostly off-SWIFT, forcing U.S. regulatory adaptation (expected August 2025 bill).
Types:
- Onshore: USDC (Circle/Coinbase).
- Offshore: USDT (Tether; El Salvador-registered, U.S.-managed reserves).
6. Implications for China and the Path Forward
Strategic Responses:
- Pilot offshore RMB stablecoin in Hong Kong, synergizing with CBDCs (two-tier architecture: PBoC → issuer → global circulation).
- Regulatory balance: Decentralized protocols enable fairness; centralized apps ensure compliance.
FAQs
Q: How do stablecoins improve financial inclusion?
A: They enable unbanked populations (e.g., 60% in Kenya) to access global payments via mobile wallets, bypassing traditional accounts.
Q: Why is USD stablecoin adoption rising despite SWIFT bypass?
A: Technology-driven efficiency ($20 trillion transactions in 2024) compels adaptation, with the U.S. safeguarding dollar primacy.
Q: What’s next for asset tokenization?
A: Physical assets (2025+) will require solving information binding—think blockchain-integrated IoT devices for real-time data.
👉 Learn more about the future of tokenized economies
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