The stablecoin ecosystem is rapidly evolving into a cornerstone of the digital economy, bridging traditional finance with blockchain innovation. With global stablecoin market capitalization soaring from $20 billion in 2020 to $250 billion by May 2025—a 11x surge in just five years—the sector has drawn increasing attention from financial institutions, regulators, and investors alike. At the heart of this transformation are key players such as ZhongAn Online, now recognized as Hong Kong’s first licensed custodian bank for stablecoin reserves, and LianLian Digital, which recently obtained a virtual asset trading license. These milestones underscore the growing institutionalization and regulatory clarity shaping the future of digital finance.
This article explores the stablecoin value chain, market dynamics, regulatory developments, and strategic opportunities—particularly within Asia—while identifying core growth drivers including digital currency adoption, cross-border payments, reserve banking, and blockchain infrastructure.
Understanding Stablecoins: Types and Functions
Stablecoins are digital assets designed to maintain price stability by being pegged to underlying assets such as fiat currencies, commodities, or other cryptocurrencies. They serve three primary economic functions:
- Medium of exchange
- Unit of account
- Store of value
These features make stablecoins essential for everyday transactions in decentralized ecosystems, reducing volatility risks associated with cryptocurrencies like Bitcoin or Ethereum.
There are four main types of stablecoins:
- Fiat-collateralized (e.g., USDT, USDC) – backed 1:1 by reserves in fiat currency
- Crypto-collateralized – over-collateralized using blockchain-based digital assets
- Commodity-backed – linked to physical assets like gold or real estate
- Algorithmic – use smart contracts and supply adjustments to maintain parity
Currently, fiat-backed stablecoins dominate the market, with USDT and USDC together accounting for over 87% of total market cap, highlighting investor preference for transparency and reliability.
Market Landscape: The Dollar’s Dominance and Emerging Shifts
Despite the global nature of blockchain networks, the stablecoin market remains heavily dollar-centric. As of 2025, dollar-pegged stablecoins represent 86% of all circulating supply, far exceeding the U.S. dollar’s 49.68% share in traditional international payments.
This imbalance reflects deep-rooted trust in the U.S. financial system but also exposes vulnerabilities. Should the U.S. dollar experience long-term depreciation due to macroeconomic shifts or geopolitical factors, confidence in dollar-denominated stablecoins could wane—opening doors for alternatives tied to stronger economic fundamentals.
In contrast, China's growing influence in global trade—backed by its 28.8% share of global manufacturing value-added output—positions it uniquely to challenge this status quo. With the digital yuan (e-CNY) achieving cross-border settlements worth 1.8 trillion RMB in 2025—an increase of 320% year-on-year—there is a clear trajectory toward a more balanced, multipolar digital currency landscape.
Regulatory Frameworks: U.S. vs. Hong Kong Leadership
Regulation plays a pivotal role in shaping the legitimacy and scalability of stablecoins. Two jurisdictions have taken leading roles: the United States and Hong Kong.
United States – The GENIUS Act
In early 2025, the U.S. passed the Generating Engagement for National Innovation Using Stablecoins (GENIUS) Act, bringing stablecoin issuers under federal oversight. Key requirements include:
- Full backing of reserves
- Regular third-party audits
- Clear disclosure of collateral composition
- Licensing for issuing entities
Hong Kong – World’s First Comprehensive Stablecoin Law
Hong Kong elevated its position as a fintech hub by enacting the Stablecoin Ordinance in May 2025, becoming the first jurisdiction globally to establish a complete regulatory framework for stablecoin operations. The law mandates:
- Licensing for all issuers
- Designation of approved custodian banks
- Real-time reserve monitoring
- Capital adequacy standards
Notably, ZhongAn Online (Stock Code: 06060) has been authorized as Hong Kong’s first licensed reserve custodian bank, enabling it to provide secure asset托管 services for stablecoin operators—a critical function ensuring transparency and user trust.
Meanwhile, mainland China maintains strict controls on private cryptocurrencies while actively promoting its central bank digital currency (CBDC). Europe adopts a more permissive stance under MiCA (Markets in Crypto-Assets Regulation), though implementation lags behind Asia and North America.
The Stablecoin Value Chain: Key Players and Business Models
The stablecoin ecosystem consists of three core components:
1. Issuers
Companies that create and manage stablecoins generate revenue primarily through interest earned on reserve assets. By holding low-risk, high-liquidity instruments like short-term Treasuries or commercial paper, issuers capture the spread between near-zero issuance costs and investment returns.
Examples include:
- JDBlockchain (JD Coin)
- Yuanyi Tech
Both have entered Hong Kong’s regulatory sandbox for pilot programs.
2. Reserve Custodians
These are licensed financial institutions responsible for holding and safeguarding reserve assets. Their role ensures that each issued token is fully backed and independently verifiable.
ZhongAn Online Bank stands out as a pioneer in this space, offering institutional-grade custody solutions compliant with the new Stablecoin Ordinance.
3. Trading Platforms
Exchanges facilitate the buying, selling, and swapping of stablecoins, earning fees from transaction volumes.
Prominent platforms in Asia include:
- OSL – a regulated digital asset exchange in Hong Kong
- DFX Labs – focused on institutional-grade trading infrastructure
👉 Learn how advanced trading platforms are optimizing stablecoin liquidity and security protocols.
Strategic Players to Watch
Several companies are positioning themselves at critical junctions of the stablecoin value chain:
| Company | Role | Highlight |
|---|
(Note: Table removed per instructions)
Instead:
- ZhongAn Online (06060.HK) – First licensed custodian bank in Hong Kong; provides secure reserve management and compliance infrastructure.
- LianLian Digital (02598.HK) – Recently awarded a virtual asset trading license, enabling it to offer regulated crypto-to-fiat conversion services.
- Newland (000997.SZ) – Expanding its footprint in digital RMB cross-border payment systems, integrating blockchain into supply chain finance.
These firms exemplify how traditional fintech players are adapting to the blockchain era through strategic licensing and technological upgrades.
Frequently Asked Questions (FAQ)
Q: What makes a stablecoin truly "stable"?
A: Stability comes from full collateralization—each coin must be backed by equivalent reserves in cash or highly liquid assets—and regular auditing to ensure transparency.
Q: Why is Hong Kong emerging as a stablecoin hub?
A: Thanks to its clear regulatory framework (the 2025 Stablecoin Ordinance), strong legal system, and integration with mainland China’s financial initiatives, Hong Kong offers a trusted environment for institutional participation.
Q: Can non-dollar stablecoins succeed globally?
A: Yes—especially those backed by real-world assets or issued by economies with strong trade balances. The rise of digital RMB and commodity-linked tokens shows growing demand for diversified options.
Q: How do stablecoin issuers make money?
A: By investing reserve funds in safe-yielding assets like U.S. Treasury bills or short-term bonds, they earn interest without passing on costs to users.
Q: Is there risk in holding large amounts of USDT or USDC?
A: While generally considered safe, risks include counterparty exposure, lack of full redemption guarantees during crises, and regulatory scrutiny—especially if reserves aren’t fully transparent.
Q: What’s the future of algorithmic stablecoins?
A: After high-profile failures (e.g., UST), confidence remains low. Future success depends on better design mechanics and hybrid models combining collateral with algorithmic adjustments.
Future Outlook: Beyond Dollar Dependence
As global trade diversifies and digital infrastructure matures, we’re likely to see a shift away from unilateral dollar dominance in stablecoins. The integration of real-world assets (RWAs) such as trade receivables, commodities, or even carbon credits could form the basis of new-generation stablecoins with intrinsic economic backing.
Moreover, the rapid expansion of digital RMB cross-border usage, especially along Belt and Road corridors, signals a strategic push toward financial sovereignty and de-dollarization.
With Hong Kong setting a gold-standard regulatory model and firms like ZhongAn Online and LianLian Digital leading institutional adoption, Asia is poised to play a defining role in shaping the next phase of monetary evolution.
The convergence of regulation, technology, and macroeconomic trends suggests that now is a pivotal moment for stakeholders across the stablecoin value chain—from issuers and custodians to investors and policymakers—to act decisively.