The Reshaping of Cross-Border Payment Systems Under the Full Penetration Hypothesis of USD Stablecoins

Premise: The United States has passed the 'Stablecoin Regulation and Custody Act' (assumed name), providing complete requirements for the anchoring assets of USD stablecoins, the capital of issuing institutions, and bankruptcy isolation mechanisms. As a result, the market has formed a high consensus on the credit and convertibility of mainstream USD stablecoins (hereinafter referred to as USD-S), and in terms of fees, speed, and programmability, it far surpasses traditional wire transfers and credit card networks. For the sake of discussion, the following will uniformly refer to USD-denominated tokens anchored at 1 USD-S≃1 USD with 100% reserves as 'USD stablecoins'.

Reminder: The most important conclusion of this article is in the last sentence!

1. Legal and Financial Structure: How USD Stablecoins 'Lock' Underlying USD

Link	Traditional USD	USD-S under the Stablecoin Act Framework
Issuance End	Commercial banks issue deposits or monetize US Treasuries led by the Federal Reserve	Issuer receives customer USD → Custody in qualified reserve accounts (Fed Master Account or FDIC-insured commercial banks) → Simultaneously minting on-chain
Reserve Ownership	Deposits can be re-loaned, M2 multiplier expansion	Reserves 100% entrusted isolation cannot be re-loaned, can be invested in T-Bill, RRP, and other extremely low-risk assets
Redemption Process	Interbank clearing or CHIPS / Fedwire	Burn USD-S → Issuer instructs custodian bank/money market account to wire USD to user

Key Points: USD base currency always remains within the US regulatory vision; what circulates on-chain is merely USD debt certificates. Any offshore entity wishing to exchange USD-S back to physical USD must reverse flow back to the issuer's custodian bank account.

2. User Experience Driven 'Full Stablecoinization' Scenario

Fees and Speed:

Typical wire transfer (SWIFT + CHIPS) charges 25–50 USD+, takes 1–2 days to arrive;

USD-S on-chain fee <0.001 USD (Layer-2 or sidechain) + instant arrival.

Programmable: Supports smart contract automatic settlement, trade finance pledging, real-time debt management.

Network Effect: When leading payment service providers, cross-border e-commerce, and shipping platforms all default to accepting USD-S settlement, currency network externalities drive on-chain channels to become the main route.

Assumption: By 2030, over 80% of global USD-denominated B2B/B2C online transactions will adopt USD-S, with traditional fiat wire transfers becoming a niche backup channel.

3. Migration of Payment Channels for Chinese Foreign Trade Enterprises

3.1 Current Model

graph LR Buyer (USD account) -->|SWIFT/Card | Overseas Bank --> Chinese Receiving Bank -->| Settlement and Sale | PBOC/Foreign Reserves

USD Clearing falls on CHIPS & FEDWIRE;

Chinese banking industry obtains USD positions through correspondent banks and foreign exchange bureau approved quotas;

After corporate settlement, the central bank increases official foreign exchange reserves.

3.2 USD-S Model

USD base currency remains locked in the custodian account;

If Chinese domestic financial institutions cannot or do not wish to redeem, domestic USD fiat inflow will significantly decrease;

If exporters need RMB, there are three paths:

Domestic OTC merchants/banks purchase USD-S with RMB → they hold stablecoins;

Overseas peers purchase USD-S with USD fiat → pay RMB to exporters (cross-border payment license), essentially still bypassing traditional USD flow;

Secondary market (DeFi, exchanges) sell to exchange USDT/USDC-RMB counterparties, then withdraw.

Core Difference: USD cash positions no longer necessarily flow into the Chinese banking system; instead, they are replaced by on-chain tokens suspended in domestic wallets.

4. Potential Impact on China's Foreign Exchange Reserves and Banking System

Dimension	Traditional Model	Changes after Full Stablecoinization	Impact Intensity
Official Foreign Exchange Reserves	Goods surplus + capital inflow converted to reserves through settlement and sale	Export USD-S does not increase reserves unless redeemed	★★★★
Commercial Bank USD Positions	Funds pool from exporter settlement and sale, foreign capital deposits	Decrease. If banks do not hold USD-S / have no redemption channels, USD sources shrink	★★★
Exchange Rate Formation	Interbank foreign exchange market + CFETS	USD-S-CNY OTC market may emerge → onshore/offshore/on-chain three prices coexist	★★★
Capital Control Effectiveness	Regulate 'funds entry and exit gates' + bank reporting	On-chain point-to-point transfers difficult to completely block; need on-chain address regulation	★★★★
Money Multiplier	Foreign exchange settlement → base currency → M2	If foreign exchange settlement decreases, PBOC base currency issuance mechanism needs adjustment	★★☆

5. Response Loop: RMB and USD-S Exchange Mechanism

Domestic Compliance 'Stablecoin Settlement Bank'

Approved to open USD-S redemption agency account;

Holding coins is a custody certificate, can be exchanged for USD from the issuer and sold to the central bank or enterprises through the interbank market.

Need US side to provide KYC/AML exemption or mutual recognition agreement, realistic political feasibility is questionable.

Central Bank Digital Currency (e-CNY) x Stablecoin Bridge

Design inter-chain atomic exchange protocol: Exporters directly exchange USD-S with domestic institutions on-chain for e-CNY;

US reserve funds still remain in the issuer's custodian account, but e-CNY is injected into domestic circulation;

PBOC's USD reserves also have no increment, need to supplement through other channels (foreign debt, investment income).

Offshore Clearing Center

Allow Chinese banks to establish USD-S clearing pools in Hong Kong/Singapore;

Complete redemption through the regulatory bridge between the Hong Kong Monetary Authority and the Federal Reserve, and then adjust onshore USD positions.

6. Global Financial System Linkage Effect

Participants	Profit / Loss
US Treasury & Federal Reserve	Issuers reserve large amounts of T-Bill → low-cost financing expansion; foreign reserves 'return flow lock-in' consolidates USD hegemony
Stablecoin Issuers	Earn reserve interest spread + on-chain network effect, becoming 'shadow bill stable pool'
Emerging Market Central Banks	If export settlement is dollarized → reserve growth slows; monetary policy independence challenge intensifies
International Payment Giants	VISA, Mastercard compete to go on-chain; profit structure shifts from interchange fees → on-chain gateway fees
Cross-border Underground Banks	On-chain anonymous P2P usage rate rises; AML/KYC impacts regulatory gray areas

7. China's Policy Options and Strategic Considerations

7.1 Regulatory Level

On-chain USD Stablecoin Identification and Graded Management

Introduce 'permission whitelist': Only allow compliant stablecoins to enter the onshore secondary market.

Implement address labeling + real-time monitoring, referring to FATF 'Travel Rule'.

Mandatory Settlement and Sale New Rules

Require export enterprises to declare & choose settlement or custody within a certain period after receiving USD-S;

Unsettled USD-S can be listed as foreign debt or offshore assets, improving cross-cycle regulation transparency.

Cross-border Data and Payment License Linkage

Any domestic node operating USD-S/DeFi corresponding front-end needs to obtain cross-border payment pilot license;

Connect to the central bank's anti-money laundering system, included in the foreign exchange bureau's capital project management.

7.2 Market-oriented Countermeasures

Goal	Possible Measures	Expected Effect
Stabilize Foreign Reserves	- Increase settlement incentives: foreign exchange swaps, tax and fee reductions - Encourage exporters to use USD-S to purchase overseas stocks and bonds → central bank hedging	Incremental transfer back to official reserves or enhance the diversity of offshore assets
Expand RMB Usage	Promote CNY pricing + e-CNY settlement in foreign trade contracts; counter USD-S with cross-border e-CNY convenience	Reduce dependence on the USD system
Strengthen Local Technology Stack	Develop alliance chain + smart contract clearing network, support multi-currency atomic swaps	Form a parallel 'East Data West Calculation' payment track with USD-S

8. Conclusion

The experiential advantages of USD stablecoins may pull a large amount of global USD-denominated trade from SWIFT/CHIPS to public chains/custody chains;

For China, sharp reduction in USD fiat inflow means weak growth in official foreign reserves, shrinking bank USD liability pools, and consequently impacting RMB exchange rate management and base currency issuance logic;

Capital control and AML systems face new technological challenges, need to compensate through on-chain address regulation, permission whitelists, mandatory settlement and sale reporting;

The long-term strategy is to enhance the network effect of RMB and e-CNY, build compliant exchange hubs for USD-S domestically and abroad, and strive for discourse power in the global multi-polar clearing pattern.

Key Judgment: Stablecoins have locked the 'anchor' of USD assets, amplifying USD financial potential; if the digitalization and clearing convenience of the local currency are not simultaneously enhanced, China's trade surplus may still 'earn USD but not touch USD'. Therefore, 'digital RMB + compliant stablecoin exchange' and 'strengthening foreign exchange cross-cycle regulation' will become unavoidable policy tools.