Stablecoins and the New Politics of Money Movement

For decades, financial influence has been built around control of monetary systems, payment networks, and settlement infrastructure. The U.S. dollar’s global position has been supported not only by its role in trade and reserves, but also by the financial networks that enable money to move across borders.

That architecture is now expanding.

Blockchain-based payment systems and stablecoins are introducing a new layer into global finance, connecting digital assets with areas traditionally dominated by banks and central institutions: cross-border settlement, liquidity management, payments, and financial infrastructure.

The competition is increasingly focused on who will define the standards, regulatory frameworks, and networks that support digital money movement.

The United States: Turning Stablecoins Into a Dollar Settlement Layer

The United States has moved toward establishing a regulatory framework designed to integrate stablecoins into the broader financial system.

The GENIUS Act, passed in 2025, created federal requirements for payment stablecoins, including rules around reserve backing, transparency, and issuer oversight.

The legislation represents a significant step in defining how privately issued digital dollars operate within regulated markets.

The scale of the market explains the growing policy attention. Stablecoin capitalization has expanded from roughly $200 billion in early 2025 to more than $300 billion by 2026, according to CoinGecko and DeFiLlama data, with U.S. dollar-backed assets representing the dominant share of supply. Tether’s USDT and Circle’s USDC continue to account for the majority of stablecoin liquidity globally.

The dollar’s existing position provides a strong foundation for this expansion. According to IMF COFER data, the U.S. dollar represents around 58% of allocated global foreign exchange reserves, maintaining its status as the world’s leading reserve currency.

The regulatory debate around stablecoins has therefore become closely linked to the future of dollar-based payment infrastructure.

Traditional payment companies are also moving into this space. Visa’s expansion of stablecoin services with the Visa Stablecoin Platform (VSP) illustrates how established payment networks are exploring blockchain-based settlement capabilities alongside existing financial systems.

China and Hong Kong: Building Alternative Digital Settlement Channels

China’s approach has focused on state-backed infrastructure and greater control over digital payment systems.

The People’s Bank of China has spent years developing the digital yuan (e-CNY), expanding pilot programs across cities and testing applications ranging from retail payments to cross-border transactions.

China has also participated in international digital settlement experiments, including Project mBridge, a BIS Innovation Hub initiative involving the Hong Kong Monetary Authority, the People’s Bank of China, the Bank for International Settlements, and other central banks.

The project explored how distributed ledger technology could support faster cross-border settlement between financial institutions.

Hong Kong has emerged as a key testing ground for regulated digital asset infrastructure.

The territory introduced its Stablecoins Ordinance in 2025, establishing a licensing framework for fiat-referenced stablecoin issuers. The rules require issuers to obtain authorization, maintain adequate reserves, and meet governance and redemption requirements.

Hong Kong’s approach reflects a focus on integrating stablecoins into regulated financial markets. Early licensing discussions have emphasized institutional participation and banking involvement rather than purely crypto-native adoption.

The city has also continued expanding digital yuan experiments, reinforcing its role as a bridge between mainland China’s financial system and international markets.

Europe’s Approach: Strategic Autonomy Through Regulation

Europe has taken a regulation-first approach to digital assets, focusing on creating clear rules for market participants while developing greater control over payment infrastructure.

The Markets in Crypto-Assets Regulation (MiCA) established one of the world’s most comprehensive digital asset frameworks, introducing requirements for crypto service providers and stablecoin issuers.

Under MiCA, issuers of electronic money tokens and asset-referenced tokens must comply with requirements covering reserves, governance, and consumer protection.

The European Central Bank is also continuing work on the digital euro, designed as a central bank-backed digital payment instrument that could complement existing payment systems.

The European strategy reflects concerns around dependence on external payment networks. As money becomes increasingly digital, control over payment infrastructure has become a strategic issue for regulators.

The UAE: Building a Regulated Digital Finance Corridor

The UAE has developed a distinct approach focused on creating regulatory infrastructure for digital assets, stablecoins, and tokenized financial markets.

Rather than positioning digital assets solely as an investment category, the country has built frameworks aimed at attracting institutional participation and integrating blockchain-based systems into broader financial activity.

The foundation was established early.

Abu Dhabi Global Market (ADGM) introduced one of the first comprehensive digital asset regulatory frameworks through the Financial Services Regulatory Authority (FSRA) in 2018, covering activities including exchanges, custodians, and crypto asset intermediaries.

Dubai followed with the establishment of the Virtual Assets Regulatory Authority (VARA) in 2022, creating a dedicated regulator responsible for overseeing virtual asset activities in the emirate.

The UAE’s approach has been to treat regulation as part of financial infrastructure.

This has extended to payment-focused digital assets. The UAE Central Bank’s Payment Token Services Regulation introduced requirements around licensing, reserve management, and consumer protection for payment token activities.

The regulatory direction has opened discussions around how stablecoins and deposit tokens could interact with the banking sector as financial institutions explore blockchain-based settlement models.

The UAE’s stablecoin strategy is also closely connected to its position as a global trade and financial hub.

Tether’s partnership with the Dubai Multi Commodities Centre (DMCC) highlights how stablecoins are being explored beyond trading environments, with potential applications in cross-border commerce and settlement.

Similarly, the expansion of institutional stablecoin networks such as USDU in the UAE reflects growing demand for regulated digital settlement solutions designed for financial institutions.

The UAE’s role in this market is increasingly tied to connectivity: linking global capital, regional trade flows, and regulated digital asset infrastructure.

A Fragmented Global Payment Landscape Emerges

The development of stablecoin frameworks across major economies points toward a more diverse global payment environment.

The United States is building a regulated ecosystem around dollar-backed stablecoins.

Europe is developing digital payment infrastructure under a comprehensive regulatory framework.

China is advancing state-backed digital settlement systems.

The UAE is positioning itself as a regulated financial corridor connecting international digital asset activity.

These approaches differ, but each reflects the same strategic priority: shaping the systems through which money moves.

The global financial system may develop through multiple digital settlement networks operating across different jurisdictions, currencies, and regulatory models.

The Strategic Value of Digital Settlement Infrastructure

The importance of stablecoins extends beyond their role as blockchain-based representations of currencies.

They sit at the intersection of payments, monetary policy, regulation, and financial infrastructure.

Banks are developing tokenized settlement systems. Governments are defining regulatory frameworks. Financial centers are competing to attract companies building digital asset infrastructure.

Traditional financial networks are adapting as well. Swift’s blockchain initiatives with global banks show how established payment infrastructure providers are exploring tokenized deposits and blockchain-based settlement models. Swift Moves Blockchain Into Production as Global Banks Pilot Tokenized Deposit Payments

The next phase of competition in finance will increasingly involve the infrastructure behind money itself: how value is issued, transferred, recorded, and settled.

Stablecoins have become one of the clearest examples of how blockchain technology is moving from a market experiment into a strategic component of global financial architecture.