Core Insights - The article discusses the rapid expansion of stablecoins and their profound impact on the international monetary system, emphasizing the need for regulatory frameworks and reforms to address structural changes in the currency circulation domain [2][3][4]. Group 1: Overview of Stablecoins - Stablecoins are a significant innovation in the cryptocurrency sector, effectively addressing the high volatility issues prevalent in the cryptocurrency market by anchoring to fiat currencies or other assets [3][4]. - The market value of stablecoins has surged from under $2 billion in October 2017 to nearly $170 billion by October 2024, with a notable increase in transaction volumes during 2020 and 2021 [13][14]. - USDT, as the leading stablecoin, holds approximately two-thirds of the market share, followed by USDC and DAI, highlighting the dominance of dollar-pegged stablecoins [13][14]. Group 2: Impact on International Monetary System - Stablecoins enhance the efficiency of cross-border payments and may replace some functions of traditional reserve currencies under specific conditions, posing challenges to the existing payment ecosystem [4][5]. - The reliance on stablecoins, particularly those pegged to the US dollar, may lead to increased dollarization in smaller economies, threatening the sovereignty of local currencies [4][5][6]. - The cross-border nature and technological complexity of stablecoins present significant challenges for international regulation, including jurisdictional issues and compliance risks [4][5][6]. Group 3: Theoretical Framework and Analysis - The article introduces the concept of "currency circulation domain" to analyze the relationship between stablecoins and the international monetary system, focusing on spatial, institutional, and functional dimensions [5][19]. - The analysis reveals that the expansion of stablecoins is driven by the dysfunction of the current international monetary system, creating a demand for new tools and institutions [19][20]. - The emergence of stablecoins has blurred the boundaries of traditional currency circulation, particularly as they are increasingly adopted by traditional payment systems [30][31]. Group 4: Regulatory and Policy Recommendations - The article calls for enhanced regulatory measures and international cooperation to address the challenges posed by stablecoins, particularly in the context of their rapid growth and impact on monetary sovereignty [4][5][6]. - Specific policy suggestions are provided to strengthen the regulatory framework for stablecoins and reform the international monetary system to better accommodate the changes brought about by digital currencies [5][6].

Group 1: Market Size and Regulatory Environment - The stablecoin market has rapidly grown, exceeding $220 billion by June 2025, with Tether (USDT) and USD Coin (USDC) accounting for approximately 90% of the market share [2][5] - Active stablecoin wallets surpassed 260 million since June 2024, indicating a rapid increase in adoption [2] - Stablecoins are primarily used as trading mediums for cryptocurrencies, with an annual transaction volume reaching $5.67 trillion in 2024, comparable to major credit card networks [3] Group 2: Regulatory Developments - Recent legislative efforts in various regions, including the U.S. and Hong Kong, aim to regulate stablecoins, with the U.S. Senate passing the GENIUS Act and Hong Kong's Stablecoin Ordinance being approved [5][6] - Regulatory frameworks will impose strict requirements on reserve assets, information disclosure, and anti-money laundering (AML) measures, promoting financial stability while fostering innovation [5][6] Group 3: Implications of Regulation - Inclusion of stablecoins in financial regulation may transform them into "tokenized deposits," providing some level of protection to holders and enhancing their role as transaction mediums [7] - Clear regulatory requirements are expected to attract more financial institutions to issue stablecoins, leading to greater mainstream adoption [8] Group 4: Future Outlook - The demand for stablecoins is likely to diversify beyond the U.S. dollar, with increasing issuance of stablecoins pegged to other currencies like the euro and yen [9] - Regulatory clarity may support the U.S. dollar's dominance in the short term, while also potentially leading to a more diversified international monetary system in the long run [9][10]