The digital yuan, designed by People’s Bank of China, is unlikely to become more popular than USDT in Asian markets, an expert from Genesis Block believes.
Genesis Block’s Charles Yang supposes that the digital currency issued by the Chinese central bank is designed to challenge the dominance of the US dollar, not cryptocurrencies or stablecoins. It will be difficult for the digital yuan not only to resist the popularity of bitcoin, but also to occupy a niche in those areas where crypto versions of the dollar, such as Tether, are already actively used.
According to Yang, there are two key factors for the successful introduction of a digital asset in Asian markets. First, it should be suitable for speculation, to which traders from South Korea and China are historically more prone. Secondly, Asian traders are interested in coins that can easily overcome cross-border operations.
“Any country that has these capital constraints — Korea is a big one, China’s obviously another major one — [where] people just can’t go through regular banking channels to send money to a different country. […] This is the major use case of crypto right now.”
From this point of view, a bank-issued centralized digital currency cannot be a good substitute for the US dollar, since, according to Yang, the rules of capital control “will not change.”
According to him, USDT has gained immense popularity in Asia, with daily trading volume of hundreds of millions of dollars. At the same time, China cannot easily take control of Tether’s circulation in the country, despite the threat it may pose to control and supervise capital.