Stablecoins—digital assets pegged to traditional fiat currencies—are rapidly emerging as a transformative force in global finance. Combining the stability of cash with the speed and efficiency of blockchain technology, they offer a compelling alternative to legacy payment systems. With major jurisdictions like Hong Kong and the United States rolling out comprehensive regulatory frameworks, the stage is set for a new era of digital finance. At the forefront of this shift is JD.com founder Richard Liu (Liu Qiangdong), who has publicly revealed plans to launch a global stablecoin aimed at slashing cross-border transaction costs by 90% and enabling near-instant business settlements.
This isn’t just about faster payments—it’s about reimagining how money moves across borders, industries, and digital ecosystems.
What Are Stablecoins? The “Cash on the Blockchain”
At their core, stablecoins are designed to maintain a stable value by being fully backed by reserve assets such as U.S. dollars, short-term government bonds, or other high-liquidity instruments. Unlike volatile cryptocurrencies like Bitcoin or Ethereum, stablecoins minimize price fluctuations by anchoring their value to real-world assets.
They operate on public blockchains, allowing for secure, transparent, and near-instant transfers 24/7—without relying on traditional banking hours or intermediaries. Moreover, their programmable nature enables automated payments, smart contracts, and integration into decentralized financial (DeFi) applications.
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Regulators now recognize stablecoins not as speculative assets but as payment and settlement instruments—essentially "cash on the blockchain." This distinction is critical, separating them from securities or investment tokens and paving the way for clear oversight.
Regulatory Milestones: Hong Kong Leads, U.S. Follows
In a landmark move, Hong Kong became the first jurisdiction globally to implement a full-cycle regulatory framework for fiat-backed stablecoins. The Stablecoin Ordinance was gazetted on May 30, 2025, establishing a licensing regime under the Hong Kong Monetary Authority (HKMA), effective August 1. Just days earlier, on May 20, the U.S. Senate passed the Generative and Emerging Innovation in Stablecoins Act (GENIUS Act), signaling Washington’s intent to formalize stablecoin oversight.
Hong Kong’s approach is notably open: licensed issuers can back stablecoins with various fiat currencies—not just the Hong Kong dollar—making it an attractive hub for global institutions. Financial Secretary Paul Chan emphasized that this measured yet forward-looking strategy could serve as a model for national financial innovation.
Meanwhile, the U.S. aims to ensure dollar-denominated stablecoins remain under domestic regulatory control, reinforcing the greenback’s dominance in digital form.
Tech Giants Enter the Arena: JD.com and Ant Group Take Action
The regulatory green light has triggered swift responses from major tech firms:
- JD.com revealed six innovation initiatives in June 2025, one of which is its stablecoin project. Liu Qiangdong envisions issuing stablecoins across major economies, enabling B2B payments settled in under 10 seconds—compared to the current 2–4 day average. Once enterprise adoption is established, JD plans to expand into consumer (C2C) payments worldwide.
- Ant Digital Technologies, the tech arm of Ant Group, has formally applied for a stablecoin license in Hong Kong. Its international division also intends to seek approvals in Singapore and other key markets.
- JD ChainTech, a subsidiary of JD.com, has already entered the second phase of Hong Kong’s “Stablecoin Sandbox,” testing multi-platform use cases while coordinating with regulators globally.
These moves reflect a strategic pivot: from e-commerce and fintech platforms to becoming foundational players in digital currency infrastructure.
The Business Model Behind Stablecoins: Zero-Cost Funding and Yield Generation
One of the most powerful incentives for companies to issue stablecoins lies in their unique financial model: zero-cost funding arbitrage.
When users exchange fiat currency for a stablecoin, the issuer holds that cash—or equivalent assets—without paying interest. These reserves are then invested in low-risk, liquid instruments like U.S. Treasury bills, generating yield.
Take Circle, issuer of USDC—the world’s second-largest stablecoin. In 2025, nearly 99% of its $1.6 billion revenue came from interest on reserve holdings. After going public in June 2025 as the “first stablecoin stock,” Circle’s shares surged nearly 400% in eight trading days.
However, this model carries risks:
- Revenue is highly sensitive to interest rates. Circle disclosed that a 1% drop in rates would reduce annual income by $441 million.
- Future rate cuts could significantly impact profitability.
In contrast, Tether (USDT)—the market leader—generated $13 billion in profit in 2025 by allocating part of its reserves to higher-yielding assets like Bitcoin and gold. Yet Tether remains privately held, limiting public access to its returns.
This divide highlights a fragmented landscape: private giants dominate profits, while public options face valuation pressures.
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Beyond Interest: Building Real-World Payment Ecosystems
For long-term sustainability, tech giants must move beyond yield-dependent models. The real opportunity lies in expanding payment use cases—from supply chain finance and remittances to retail transactions and DeFi integrations.
JD.com’s vision exemplifies this shift: first streamline B2B settlements across borders, then scale into everyday consumer spending. By embedding stablecoins directly into its logistics and marketplace ecosystem, JD can create seamless value flows that enhance user retention and transaction volume.
Still, challenges remain:
- Cross-currency conversions still rely partly on traditional banking rails.
- Regulatory harmonization across jurisdictions is incomplete.
- Systemic risks persist if reserve management lacks transparency.
Global Implications: Stablecoins and the Dollar’s Digital Dominance
Over 99% of all fiat-backed stablecoins are pegged to the U.S. dollar, effectively creating a parallel offshore digital dollar network operating outside SWIFT. As of May 2025, total stablecoin market capitalization reached $230 billion—up more than 40x since 2020—and annual transaction volumes hit $28 trillion, surpassing both Visa and Mastercard.
According to Standard Chartered, the GENIUS Act could push stablecoin supply to $2 trillion by 2028—demanding an estimated **$1.6 trillion in new U.S. short-term Treasury purchases**. This positions stablecoin issuers as potential “buyers of last resort” for American debt, especially amid rising fiscal deficits.
Yet reliance on U.S. Treasuries introduces systemic concentration. The 2023 Silicon Valley Bank collapse briefly depegged USDC when $3.3 billion of its reserves were trapped in the failed bank—a stark reminder of counterparty risk.
FAQs: Your Key Questions Answered
Q: Are stablecoins safe?
A: Well-regulated stablecoins backed by transparent reserves (like cash or Treasuries) are generally safe. However, risks exist if reserves are mismanaged or held in risky institutions.
Q: Can stablecoins replace traditional banking?
A: Not entirely—but they can complement it by offering faster, cheaper cross-border transfers and programmable money for digital economies.
Q: Why do companies want to issue stablecoins?
A: Beyond brand value, issuing stablecoins provides zero-interest capital that can be invested for profit and helps build integrated financial ecosystems.
Q: Will China launch its own RMB-backed stablecoin?
A: While not yet official policy, experts suggest a digital RMB-linked stablecoin could support yuan internationalization and serve emerging digital trade corridors.
Q: How do regulators view stablecoins?
A: Increasingly as payment tools requiring strict reserve oversight, anti-money laundering compliance, and operational transparency—not as speculative assets.
Q: Could stablecoins challenge the U.S. dollar?
A: Unlikely in the short term. Most stablecoins reinforce dollar usage globally. True competition would require broad adoption of non-dollar digital currencies backed by credible institutions.
Final Outlook: A New Chapter in Digital Finance
Stablecoins are no longer niche experiments—they’re becoming central infrastructure in the global financial system. With giants like JD.com and Ant Group entering the space, backed by evolving regulations in Hong Kong and the U.S., we’re witnessing the birth of a smarter, faster, and more inclusive financial layer.
The race isn’t just about technology—it’s about trust, scale, and ecosystem integration. As these digital currencies mature, they may not only transform payments but also reshape how capital flows across borders—ushering in a new era of financial innovation.
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