Key Takeaways from the FX and Rates Sentiment Survey Industry Overview - The survey focuses on the foreign exchange (FX) and rates market sentiment, particularly regarding the US dollar (USD), Euro (EUR), and emerging markets (EM) currencies. It reflects the views of 42 fund managers with a total of USD 573 billion in assets under management (AUM) [7][9]. Core Insights 1. **Short USD Thesis**: The short USD remains the highest conviction trade for the rest of the year, despite being challenged by rising global growth concerns [1][3][20]. 2. **Global Growth Concerns**: There is a significant concern regarding a potential global growth slowdown, which could impact the short USD thesis [3][25]. 3. **US Exceptionalism**: The fading of US exceptionalism is a recurring theme, with expectations that both US equities and the USD may decline [1][32][33]. 4. **Investor Sentiment**: A strong majority of respondents expect the next Federal Reserve (Fed) chair to be more dovish, impacting market expectations [44][46]. 5. **FX Hedge Ratios**: Many investors prefer to increase their FX hedge ratios, indicating a cautious approach towards US assets [49][50]. Additional Insights 1. **Emerging Markets (EM) Sentiment**: EM FX and duration sentiment appears to have peaked, with a slight decline in positioning and views noted in August [15][94]. 2. **European Investment Push**: There is muted conviction regarding a broad-based European investment push, with concerns about EU defense spending and fiscal policies [22][61]. 3. **Tariff Expectations**: Most respondents expect tariffs against China to remain between 30-40% by the end of 2025, reflecting ongoing trade tensions [17][34]. 4. **Oil Price Expectations**: Expectations for oil prices are that they will remain range-bound between $60-69 per barrel, with some upside risks anticipated [36][37]. 5. **UK and Eurozone Sentiment**: GBP sentiment has turned neutral with bearish levels, while EUR sentiment remains bullish despite lighter positioning [110][103]. Potential Risks and Opportunities 1. **Fed Independence Risks**: Nearly half of the respondents expect risks to Fed independence to manifest as a steeper US Treasury (UST) curve and a weaker USD [46][39]. 2. **Global Risk Appetite**: The appetite for risk-taking in portfolios remains lower than normal, with average cash levels reported at 3.3% [77][78]. 3. **Duration Exposure**: Global duration exposure has fallen relative to the previous month, indicating a cautious stance among investors [78][80]. Conclusion The survey indicates a complex landscape for FX and rates, with significant concerns about global growth, US fiscal policy, and the evolving dynamics of the Fed. Investors are adjusting their strategies accordingly, with a notable shift towards hedging and cautious positioning in the face of potential risks.

Core Viewpoint - Stablecoins provide a stable digital currency option that is pegged to fiat currencies, primarily the US dollar, to facilitate transactions in a volatile cryptocurrency market [2][15]. Group 1: Emergence of Stablecoins - Stablecoins emerged to address the volatility of cryptocurrencies like Bitcoin, which are unsuitable for daily transactions [2]. - The core principle of stablecoins is that one stablecoin equals one US dollar, providing a reliable medium of exchange [2]. Group 2: Types of Stablecoin Issuance Mechanisms - There are three main types of stablecoin issuance mechanisms: fiat-collateralized, crypto-collateralized, and algorithmic [3][6]. - Fiat-collateralized stablecoins, such as USDT and USDC, are backed by bank deposits or government bonds, generating interest income for the issuing platform [3][8]. - Crypto-collateralized stablecoins, like DAI, require users to over-collateralize their assets, which can lead to high liquidation risks [5][10]. - Algorithmic stablecoins, such as UST, rely on market mechanisms to maintain their peg but have shown vulnerabilities, as seen in the collapse of UST [6][11]. Group 3: Profit Models of Stablecoins - The profit model for fiat-collateralized stablecoins involves earning interest on the reserve assets, with USDT projected to generate over $10 billion in revenue in 2024 [9][8]. - Crypto-collateralized stablecoins charge users a stability fee for minting, which funds the operational costs of the protocol [10]. - Algorithmic stablecoins previously offered high yields to attract users but ultimately relied on continuous new investments, leading to unsustainable practices [11]. Group 4: Regulatory Developments and Applications - Hong Kong is exploring a government-regulated approach to stablecoins, focusing on real asset backing and rapid redemption capabilities [12][14]. - Institutions like JD.com and Standard Chartered are participating in pilot programs to issue stablecoins pegged to the Hong Kong dollar [13]. - Practical applications of stablecoins include cross-border B2B settlements, supply chain payments, and interactions with digital currencies like the digital yuan [15].

1． 稳定币的本质：价格锚定 → 稳定币，听起来像是币圈的"定存"？其实它更像是超市储值卡。 你有没有买过超市的100块储值卡？哪怕你半年后才刷，它也还是值100块。稳定币的道理差不多：它的 价格始终锚定在1美元上下，不管市场如何波动，大家都信它值1美元。就拿现今占市场份额超过90%的 USDT和USDC两家币种来说，他们的稳定币都是与美元1：1进行兑换的。 Q：为什么稳定币能维持"1美元"？ （锚定机制：通过真实资产储备或算法调控，确保稳定币价格稳定在目标值附近的制度设计。） 比如价格跌到0.98美元，套利者会低价买入，再去官方换回1美元，中间赚2分钱。正是这些套利操作在 帮市场自动修正价格。 2． 三种抵押方式与代表项目 → 虽然表面上都长得像"1美元"，背后的做法其实各不相同。 稳定币的生成方式分为三种，就像房子有钢筋混凝土的，也有木结构的，还有搭积木的，每种结构各有 利弊。 | 低押方 ERSESSMENTS SESSEDS SECREED TREESS CORRESS SECTION CONSULTED | 代表项目 | | 风险点 | | --- | --- | --- | --- | | 法币抵 ...

Core Viewpoint - Stablecoins, regarded as the "digital dollar" of the crypto world, are currently at the forefront of regulatory reform, particularly following the signing of the Genius Act by President Trump, which establishes clear federal standards for stablecoin issuance and regulation [1][12]. Summary by Sections Regulatory Framework - The Genius Act mandates that only entities with federal licenses or those regulated by the Federal Reserve and FDIC can issue "payment stablecoins," requiring issuers to hold high-quality reserve assets such as cash or U.S. Treasury bonds [1][12]. Market Overview - As of July 22, 2025, the total market capitalization of global stablecoins is approximately $268 billion, with Tether (USDT) being the largest at around $161 billion, followed by USDC at about $65 billion [2][3]. Tether (USDT) - USDT is the most liquid stablecoin but has faced transparency issues regarding its reserves, leading to past controversies and fines from regulatory bodies [2]. USDC - USDC is the second-largest stablecoin, known for its transparent asset disclosures and public audits, but it faced a significant price drop during the Silicon Valley Bank crisis in 2023 [3][8]. Case Studies - The UST collapse in 2022 exemplified the risks of algorithmic stablecoins, where a failure in the underlying asset led to massive market losses [5][7]. - The USDC crisis in March 2023, triggered by the Silicon Valley Bank's insolvency, resulted in a 12% price drop, highlighting the importance of reliable asset backing and federal guarantees [8][9]. Key Insights - Stablecoins require real, liquid, and low-risk assets for stability, with U.S. dollars or Treasury bonds being the most trusted collateral [9]. - For stablecoins to become mainstream payment tools, they must integrate into traditional financial regulatory frameworks, ensuring compliance and security [9][12]. - The design of stablecoins should include fair redemption mechanisms and liquidity stress testing to prevent panic-induced runs [10][11]. Regulatory Developments - The Genius Act and Hong Kong's Stablecoins Ordinance aim to enhance transparency and risk control in stablecoin issuance, with different focuses on compliance and innovation [12][13]. - Both regulations emphasize the need for stablecoins to be treated as "digital cash" with regulatory oversight, aiming for a balance between safety, transparency, and efficiency [14]. Future Outlook - The U.S. and Hong Kong are likely to engage in a competitive yet complementary relationship regarding stablecoin internationalization, with U.S. stablecoins potentially integrating into global payment systems and Hong Kong serving as a bridge for digital RMB [14][15].

Investment Rating - The report does not explicitly provide an investment rating for the stablecoin industry Core Insights - Stablecoins are viewed as a new type of financial infrastructure with the potential to simplify payment processes and enhance the efficiency of financial markets [2][26] - The development of offshore RMB stablecoins is suggested as a priority for China to participate in the stablecoin evolution, while emphasizing that stablecoins are merely a tool for advancing RMB internationalization [1][5] Summary by Sections What are Stablecoins? - Stablecoins are defined as a bridge between the crypto world and the traditional financial system, characterized by a balance of centralization in operation and decentralization in technology [8][9] - They are not considered currency but rather tokens that derive their value from fiat currency reserves [11][12] Recent Attention on Stablecoins - Recent legislative advancements in the US and Hong Kong have heightened interest in stablecoins, alongside significant market events such as Circle's IPO [16][17] - The total market size of stablecoins has surpassed $260 billion, with transaction volumes projected to exceed $15.6 trillion in 2024, surpassing traditional payment platforms like Visa [17][21] Applications and Potential Impact in Financial Markets - Stablecoins enhance payment efficiency, particularly in cross-border transactions, by reducing costs and transaction times compared to traditional systems like SWIFT [40][45] - They also promote financial inclusion, especially in high-inflation economies, by providing a stable asset for savings and transactions [44][46] Impact on the International Monetary System - Stablecoins can increase the penetration of the US dollar while also posing challenges to capital controls in various countries due to their inherent anonymity [4][30] - The rise of stablecoins may lead to increased competition from non-USD stablecoins and central bank digital currencies (CBDCs) [4][5] China's Participation in Stablecoin Development - The report suggests that China should focus on developing offshore RMB stablecoins and creating real-world applications to build a robust ecosystem [5][6] - It emphasizes that the success of RMB as a trusted international currency depends on its legal and functional anchors, rather than solely on stablecoin technology [5][6] Mechanisms and Incentives in the Stablecoin Industry - The stablecoin ecosystem operates on a trust mechanism where the backing of fiat reserves is crucial for maintaining stability and transparency [30][31] - Participants in the stablecoin market, including users, issuers, and custodians, have aligned incentives that drive the ecosystem's growth [31][35] The "Impossible Triangle" of Stablecoins - Stablecoins face a trade-off between price stability, decentralization, and capital efficiency, with most successful stablecoins prioritizing price stability [37][39] - The report highlights that current leading stablecoins are primarily centralized, relying on institutional trust to maintain their value [37][39] Conclusion on Stablecoins as Financial Infrastructure - Stablecoins are positioned as a critical component of the next generation of cross-border digital finance, with the potential to reshape traditional financial systems [26][27] - The report concludes that while stablecoins offer significant advantages, they also introduce new risks and challenges that need to be managed [48][49]

Core Viewpoint - Stablecoins have the potential to become a new type of financial infrastructure, bridging the gap between the crypto world and traditional finance, and their development should be strategically considered by China [2][3]. Group 1: What are Stablecoins? - Stablecoins are defined as "the most decentralized among centralized assets and the most centralized among decentralized assets," highlighting their dual nature of being rooted in blockchain technology while also requiring regulatory oversight [3][7]. - They are linked to fiat currencies, which means they must comply with traditional financial regulations, thus acting as a bridge between the crypto and real worlds [3][8]. - The potential applications of stablecoins include cross-border payments, asset preservation, and integration into decentralized finance (DeFi) ecosystems [3][22]. Group 2: Impact on Financial Markets - Stablecoins can enhance payment efficiency, offering low-cost and fast transactions, particularly beneficial for cross-border payments [38]. - They can improve financial inclusivity, especially in high-inflation economies, by providing a means for asset preservation [41][42]. - However, stablecoins may pose risks to monetary stability and sovereignty in countries with weak financial systems, potentially undermining local currencies and monetary policies [45][46]. Group 3: Influence on International Monetary System - Stablecoins depend on the credit of fiat currencies, primarily the US dollar, and their rise could reshape global capital flows and the international monetary system [54][56]. - They may create new demand in regions with weak financial infrastructure, acting as a substitute for traditional banking systems [55]. - The emergence of stablecoins could challenge the dominance of the US dollar, as they provide alternative payment channels and may facilitate the rise of non-US currencies [56]. Group 4: China's Participation in Stablecoin Development - China should consider issuing offshore RMB stablecoins as a priority to participate in the development of stablecoins, leveraging its position as a major global trade player [5][57]. - The development of stablecoins could enhance China's financial resilience and flexibility in international trade, providing alternatives to traditional payment methods [57]. - However, the potential for stablecoins to bypass capital controls poses significant regulatory challenges for China [4][57].

Core Viewpoint - The signing of the "GENIUS Act" by Trump represents an extension of U.S. dollar hegemony in the digital age, aiming to consolidate its status as a global reserve currency and create new demand for U.S. Treasury bonds through the regulation of stablecoins [1][9]. Summary by Relevant Sections GENIUS Act Overview - The GENIUS Act establishes a federal regulatory framework for U.S. dollar stablecoins while explicitly prohibiting the creation of central bank digital currencies (CBDCs) in the U.S. [6]. - Key provisions include strict reserve requirements, transparency and compliance mandates, a dual-track issuance qualification system, a ban on algorithmic stablecoins, and consumer protection measures [6]. Impact on U.S. Dollar and Treasury Bonds - The act aims to reinforce the dollar's position by integrating stablecoins into the dollar system, promoting compliant stablecoins as global cross-border payment tools, and increasing demand for U.S. Treasury bonds through mandatory reserve requirements [8]. - The Trump administration emphasizes that the act will create long-term demand for U.S. Treasury bonds, which will be backed by stablecoin reserves [3][8]. Effects on the Federal Reserve and International Monetary System - The act, in conjunction with the "Anti-CBDC Monitoring National Act," diminishes the likelihood of the Federal Reserve issuing a digital dollar, thereby preventing an expansion of government financial surveillance [8]. - The compliance of U.S. stablecoins may accelerate the replacement of smaller countries' currencies, particularly in emerging markets, prompting adjustments in digital currency strategies by other economies [8]. Market Reactions and Industry Implications - The market response has been mixed; compliant issuers like Coinbase saw stock price increases, while Circle faced a drop due to reserve adjustment pressures [8]. - The regulatory framework is expected to lower barriers for traditional institutions, encouraging banks and payment companies to engage in on-chain finance [8]. - The industry may experience a reshuffle, benefiting compliant leaders like USDC while non-compliant stablecoins like USDT may face market exit or reserve adjustment pressures [8].

Core Viewpoint - The rise of stablecoins, with a total market value exceeding $250 billion, is rapidly integrating into the traditional financial system, prompting regulatory scrutiny and legislative actions globally [2]. Group 1: Definition and Role of Stablecoins - Stablecoins are a type of cryptocurrency built on blockchain technology, linked to the stability of sovereign currencies, distinguishing them from highly volatile cryptocurrencies like Bitcoin [3]. - Unlike Bitcoin, which is subject to extreme price fluctuations, stablecoins are designed to maintain a stable value through full reserve backing, making them suitable as a medium of exchange [3]. Group 2: Stability and Risks - The stability of stablecoins is contingent on the value of their underlying reserve assets; events like the Silicon Valley Bank crisis have exposed vulnerabilities, leading to concerns about "de-pegging" risks [4]. - The recent de-pegging of USDC during the Silicon Valley Bank crisis highlighted the transmission of traditional financial risks to the crypto market, raising alarms about the inherent stability of stablecoins [4]. Group 3: Regulatory Developments - The emergence of stablecoins has prompted significant regulatory focus, with jurisdictions like the EU and Hong Kong moving towards legislative frameworks to govern their use [5]. - Hong Kong's upcoming Stablecoin Regulation aims to establish a legal framework for stablecoin issuance, reflecting a broader trend of regulatory bodies responding to the growing scale of stablecoins [5][6]. Group 4: Impact on Traditional Financial Systems - Stablecoins are expected to enhance payment efficiency, particularly for cross-border transactions, potentially impacting traditional banking payment and settlement systems [7]. - While stablecoins may affect commercial banks, the overall growth of the financial market suggests that both stablecoins and traditional banking can coexist without threatening each other's survival [7]. Group 5: Central Bank Perspectives - The issuance of stablecoins, requiring full reserves, could positively influence central banks' monetary policies and fiscal challenges, although potential tax evasion through stablecoin transactions may prompt regulatory intervention [9]. Group 6: Differences Between Stablecoins and Digital Currencies - Stablecoins, issued by private entities and backed by sovereign currency reserves, differ fundamentally from central bank-issued digital currencies, which are direct representations of legal tender [10]. Group 7: Arbitrage Risks - The existence of stablecoins pegged to different fiat currencies introduces potential arbitrage opportunities due to exchange rate fluctuations, similar to risks present in traditional foreign exchange markets [11].

Summary of Conference Call on Stablecoins Industry Overview - The discussion revolves around the stablecoin market, particularly in the context of regulatory developments and market dynamics affecting the Hong Kong and global markets [1][9][10]. Core Insights and Arguments - **Stablecoin Definition and Purpose**: Stablecoins are designed to facilitate the conversion between traditional fiat currencies and cryptocurrencies, addressing the volatility issues of cryptocurrencies like Bitcoin and Ethereum [1][25]. - **Types of Stablecoins**: Stablecoins can be categorized into four main types: fiat-collateralized, crypto-collateralized, algorithmic, and commodity-backed. As of May 2025, fiat-collateralized stablecoins dominate the market, accounting for 97% of the total market capitalization [3][27]. - **Regulatory Landscape**: - The European MICA regulation and Hong Kong's stablecoin regulations impose strict compliance requirements on stablecoin issuers, including the need for regular audits and transparent asset reserves [9][10][11]. - The U.S. is advancing the Genius Act, which mandates that stablecoin issuers maintain a 1:1 ratio of high-quality liquid assets to support their stablecoins [11][12]. - **Market Dynamics**: The total market capitalization of stablecoins was approximately $215.2 billion as of March, with a 2.1% month-over-month growth in April. Tether and Circle's USDC together hold over 90% of the market share [18][19]. Important but Overlooked Content - **Risks of Algorithmic Stablecoins**: Historical failures, such as the collapse of UST and LUNA, highlight the vulnerabilities of algorithmic stablecoins during extreme market conditions [5][27]. - **Impact on U.S. Treasury Demand**: As stablecoin demand increases, issuers may become significant buyers of short-term U.S. Treasuries, although their current holdings are not substantial [18][19][29]. - **Cross-Border Payment Advantages**: Stablecoins offer significant advantages over traditional SWIFT systems in terms of speed and cost for cross-border transactions, with transactions potentially settling within minutes compared to days for SWIFT [15][16][17]. - **Need for Practical Applications**: The growth in stablecoin demand is contingent upon the development of practical applications and use cases, such as in DeFi and cross-border payments, rather than just regulatory compliance [21][22][29]. Conclusion - The stablecoin market is poised for growth, driven by regulatory clarity and the need for efficient payment solutions. However, the actual demand will depend on the successful implementation of stablecoins in real-world applications and the assurance of full asset backing by issuers [22][29].

Group 1: Core Insights - The U.S. Senate passed the "GENIUS Act" establishing the first federal regulatory framework for stablecoins, reflecting a global consensus on recognizing stablecoins' legitimacy [1][2] - Major companies like Mastercard and Morgan Stanley are actively exploring stablecoin integration into their payment systems, indicating a growing recognition of stablecoins' commercial value [2][3] - Stablecoins are categorized into three main types: fiat-collateralized, crypto-collateralized, and algorithmic stablecoins, each with distinct mechanisms and risks [3][4][5] Group 2: Market Dynamics - Fiat-collateralized stablecoins dominate the market, accounting for approximately 90% of the total stablecoin market capitalization, with USDT and USDC being the most prominent [8][9] - The use of stablecoins has expanded beyond the crypto industry, finding applications in cross-border payments, daily transactions, and as a hedge against inflation in emerging markets [10][11][15] Group 3: Regulatory Landscape - Various countries are implementing regulations to address the risks associated with stablecoins, including limitations on non-local stablecoins to protect monetary sovereignty [30][31] - The European Union's MiCA regulation categorizes stablecoins and imposes strict requirements on their issuance and operation, aiming to mitigate financial risks and enhance compliance [31][36] Group 4: Strategic Recommendations for China - China should adopt a cautious approach towards stablecoins, focusing on research and regulatory frameworks while considering the unique national context and the existing digital yuan [38][39] - Promoting offshore RMB stablecoins could enhance the internationalization of the yuan and expand its use in emerging digital scenarios [41] - Strengthening the collaboration between stablecoins and the digital yuan can leverage their complementary advantages in cross-border payments and digital asset exchanges [42]