Is China playing dull?
Ok, yesterday, I discussed the launching of the first ever Yen pegged stablecoins by JPYC, a Tokyo based FinTech company. It is one great achievement for them. It means after so many years of seeming like the Japanese were watching everything from the fence, they’ve finally decided to jump in. How fully they are will be revealed in years to come or who knows, even months.
I also talked about how the US should thank President Trump for his quick crypto (most especially Bitcoin and stablecoins) adoption. In short, just stablecoins alone is something worth talking about. Maybe I should also extend these smart moves to Circles and Tether; the two companies behind USDC and USDT respectively.
I mean, they have been building out the hopes of Americans without any government applause. Why are they yet to launch stables?
How big is the stablecoins market? We are talking of over $300 billion with expectations of exceeding $700 billion by 2026. If you were to ask me, I wouldn't be surprised seeing it scale to $1 trillion by next year. Currently USDT (Tether) controls over 65% of this market followed by Circles’ USDC. You can see what I mean. What if, just what if they never took this seriously and some other pegged stablecoins dominated this chain.
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This is where the question of, was the Chinese government dull about stablecoins adoption? Mr Biden had been on duty for the past four years, so how come the Chinese never won this virtual fiat race? The first thing to consider here is rigidity. As we speak, there are still no Chinese pegged stablecoins. This is something very surprising to me.
Many early efforts by such companies have been put to futility by government regulations. The People’s bank of China still remains skeptical till date. The idea is to prevent Yen from exploitation, many they’ve missed the word; ‘global adoption’.
Maybe they care less about that. Personally, I wouldn't say they are not eyeing global economic control but as it stands, it seems they are too fragile to make such a dive.
How influential is the Chinese Yuan in the global market? First, the US Dollar is controlling 90% and the Japanese Yen is even more globally dominating than Yuan. So yes, it is not encouraging. I feel the Chinese government seeking to gain total control over its Yuan is creating international loopholes.
Being the second largest world economy, you would feel they could do more from here. We are entering into the era of trade and trade settlement is getting higher and higher. China is sitting around $19 trillion in GDP while the US is at an estimated $30 trillion. Don't you think the stablecoins market will have been that needed market pull for attention.
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The fact is, gaining global power is beyond your walls, you will have to get others using your product and we know how valuable money as a product is. As I earlier said, there is still no Chinese Yuan pegged stablecoins while every country base companies to make such moves are still on halt. Will they be arriving the market very late
As we speak, there are many awaiting explosions, the future of RWA is tied to how it will be easily settled. It is an industry that is expected to count in the trillion dollars in a short period. With tough and rigid government operations in China, how will they fit in? Are they giving deaf ears to this, knowing how this can draw in foreign investors.
To conclude, let me add, I don't know their current government strategy to keep maintaining relevance. Anyway, their follow up counterparts Germany is far from their GDP reach. Nevertheless, the fact is, beyond just pursuing global power in terms of economic activities, the rise of stablecoins presents a big opportunity for their economy. They have the tech, big companies who are ready to adopt and improve their internal economic productivity.
Even if they are not interested in overseas transactions, at least it should be opened up for citizens' benefits. Unless, just unless, there is big politics in the People’s Bank of China (Central Bank). Are they preventing both themselves and commercial banks from losing transaction relevance?