The real race isn’t Bitcoin vs. Ethereum. It’s the US vs. China on digital money

While crypto Twitter argues about Bitcoin versus Ethereum, two superpowers are quietly running a different race. The United States is using dollar-backed stablecoins to extend the dollar’s reach into every corner of the digital economy. China is using its e-CNY and the mBridge platform to build an alternative settlement system that bypasses the dollar entirely. The outcome will shape the next century of global finance. And almost nobody outside policy circles is paying attention.

The argument that misses the actual fight

Open any crypto publication this year, and you will find some version of the same debate. Bitcoin maximalists versus Ethereum supporters. Solana versus Ethereum. Layer ones versus layer twos. The tribal warfare is loud, it is entertaining, and it is mostly beside the point.

While that argument fills the timelines, a different and far more consequential race is being run by people who do not post memes. The United States Treasury and the People’s Bank of China are competing to define what money looks like for the next century. They are doing it in plain sight, in policy documents and central bank press releases, with two completely different theories of the case.

The American theory: extend the dollar’s reach into every digital corner of the global economy by privatizing it, regulating it, and shipping it on open networks. The Chinese theory: build a sovereign digital currency under direct state control, and link it together with friendly central banks into a parallel settlement system that does not need American rails at all.

This is the real race. It will decide whether the global financial system of the 2030s and 2040s stays dollar-denominated and U.S.-administered, or whether it splits into competing blocs with different reserve assets, different settlement rails, and different rules. The stakes are not the price of a token. They are the architecture of money itself.

What the United States is actually doing

The American strategy is easier to miss because it is being run by the private sector with regulatory blessing rather than by a central bank. But the strategy is explicit, and it has been spelled out at the highest levels of the U.S. Treasury.

The instrument is the stablecoin. The framework is the GENIUS Act, signed into law in July 2025. The thesis was stated bluntly by Treasury Secretary Scott Bessent: stablecoins are a way to “extend the dollar’s reach” in decentralized finance and cross-border payments. Crypto commentator Arthur Hayes has put it more starkly. Stablecoins, in his framing, work as on-ramps that redirect offshore liquidity into U.S. Treasury bills. Every USDT or USDC in circulation requires reserves, and those reserves sit mostly in dollar-denominated assets. Tether alone now holds roughly $113 billion in U.S. Treasuries as of Q1 2026. The stablecoin sector, in aggregate, has become one of the largest non-sovereign buyers of U.S. government debt.

This is not an accident. It is the strategy. By making it easy, legal, and trusted to hold a dollar-pegged token on any blockchain in the world, the United States has effectively privatized dollar issuance and shipped it through global crypto networks. A small-business owner in Lagos who takes payment in USDT, a remittance recipient in Manila who saves in USDC, and a Lebanese citizen who holds stablecoins because the local currency is collapsing are each, without knowing it, deepening dollar penetration into their local economies. They are also indirectly financing the U.S. Treasury market.

The numbers are now large. Fiat-backed stablecoin supply crossed $319 billion in April 2026. Adjusted transaction volume hit $10.9 trillion in 2025, with some estimates putting total settlement volume past $33 trillion, more than Visa. Roughly ninety-nine percent of fiat-backed stablecoin value is pegged to the dollar. The euro, the yuan, the yen, and every other currency together account for the remaining one percent. In digital money, the dollar is not winning. It has, so far, lapped the field.

The genius of this approach, from the U.S. perspective, is that it works without the political baggage of a U.S. central bank digital currency. There is no Federal Reserve digital dollar to argue about. There is no surveillance state implication. There is only a regulated private sector building products that happen to pour offshore savings into U.S. debt and pull the global digital economy toward dollar-denominated settlement. The state does not have to build the rails. It just has to make them legal and trusted.

The GENIUS Act is the legal scaffolding. It defines payment stablecoins as a distinct regulated category, requires one-to-one reserve backing in high-quality liquid assets, opens issuance to banks under OCC supervision, and creates a U.S.-supervised path that competes structurally with foreign stablecoins. Tether’s planned U.S. domestic stablecoin launch fits this pattern. So does the Trump administration’s USD1 stablecoin, marketed openly as a “digital dollar for the world.” The U.S. is not building one digital dollar. It is building an entire ecosystem of them, each privately issued, each pushing toward the same outcome.

What China is actually doing

China is running a different play, executed by the state directly and aimed at a different goal.

The e-CNY, the digital yuan, is the world’s largest live central bank digital currency. By late 2025, cumulative transaction value had crossed $2.3 trillion. Twenty-nine pilot cities have integrated it into public transit and retail. 180 million wallets have been created. Domestic adoption still trails Alipay and WeChat Pay, but the gap is closing, and on January 1, 2026, the People’s Bank of China made a structural change that rewrote the asset’s economic logic.

Until that date, the e-CNY was classified as M0, basically digital cash, and could not earn interest. From January 1, 2026, banks are permitted to pay interest on verified digital yuan wallets, and the e-CNY is treated as a deposit-like instrument with commercial banks as counterparties. The currency is now covered by China’s national deposit insurance. In plain language: the e-CNY went from a digital substitute for paper money to a digital substitute for a bank account. The incentive to hold it just got dramatically larger.

That domestic change is half the story. The other half is happening across borders.

Project mBridge, the cross-border CBDC platform jointly developed by the People’s Bank of China, the Bank for International Settlements, and the central banks of Thailand, the UAE, and Hong Kong, processed over $55 billion in transactions by late 2025. The e-CNY accounts for more than 95 percent of mBridge settlement volume. Cross-border e-CNY activity overall reached roughly $2.38 trillion by November 2025, an 800 percent expansion since 2023. China launched its e-CNY International Operation Center in Shanghai in September 2025. Pan Gongsheng, the PBOC governor, has explicitly framed the goal as building “a more multi-polar monetary system less vulnerable to politicization.” It is a polite way of saying: a system the United States cannot weaponize.

The expansion is mapped. The PBOC’s 2026 work plan includes new cross-border pilots with Singapore, Thailand, Hong Kong, the UAE, and Saudi Arabia. A retail e-CNY pilot is now operating in Laos, where Chinese tourists can scan QR codes at participating local merchants and settle directly in digital yuan. The 15th Five-Year Plan (2026-2030) explicitly mandates active participation in international digital-currency governance. A new e-CNY measurement, management, and ecosystem framework took effect on January 1, 2026.

The pattern is consistent. China is building a digital settlement system that is sovereign, state-controlled, interest-bearing, and designed to operate at the edges of its trade and political alliances. It does not need to displace the dollar globally. It needs to offer a credible alternative for the share of the world economy that already does business inside China’s orbit, or that wants the option not to depend on U.S. payment infrastructure. That is a smaller target than “replace the dollar,” and a much more achievable one.

The paradox at the heart of the race

Here is where the story gets interesting, and where most coverage gets it wrong.

The de-dollarization push has not been a clean fight. The BRICS bloc, now expanded with Indonesia and partner status for nations from Belarus to Vietnam, represents close to forty percent of global GDP by purchasing power parity. Russia and China settle around ninety percent of their bilateral trade in rubles and yuan. The dollar’s share of BRICS trade has fallen from 79 percent in 2022 to 58 percent by mid-2025. BRICS Pay and mBridge are building a real alternative payment infrastructure. The political will to escape the dollar is the strongest it has been in decades.

And yet the dollar’s overall position has, on the most important metrics, strengthened.

The Bank for International Settlements’ 2025 Triennial Survey, the most authoritative measure of global currency usage, found the dollar was on one side of 89.2 percent of all foreign exchange transactions in April 2025, up from 88.4 percent in 2022. The renminbi’s share rose to 8.5 percent, a meaningful increase, but still a fraction of the dollar’s. The dollar’s reserve share has dropped gradually, from 72 percent in 2001 to roughly 58 percent in 2026, but the pace is erosion, not collapse.

The paradox is that stablecoins, the very instrument that lets a Russian importer or an Iranian merchant settle a transaction without touching the U.S. banking system, are themselves overwhelmingly dollar-pegged. Ninety-seven percent of the stablecoin market is denominated in dollars. So when a BRICS-aligned exporter in Brazil sells soybeans to a buyer in the UAE and they choose to settle in stablecoins to avoid U.S. correspondent banking, they are still, in effect, transacting in dollars. They have escaped American banks. They have not escaped the dollar.

This is the contradiction at the heart of the de-dollarization movement, and the unstated reason the U.S. is comfortable with stablecoins extending into hostile jurisdictions. Even the workarounds reinforce the system. As Tether’s CEO Paolo Ardoino has argued, stablecoins like USDT reinforce dollar hegemony precisely by offering a decentralized alternative that happens to be dollar-pegged. The political instinct to flee the dollar runs straight into the practical reality that no other currency offers comparable depth, liquidity, or trust.

The economist Brad Setser at the Council on Foreign Relations has flagged a related paradox. U.S. policy that tries to coerce countries into using the dollar, through tariff threats or sanctions, may actually speed up the search for alternatives. The dollar’s strength comes partly from being the path of least resistance. The moment it becomes a path of political compulsion, more actors will pay the cost of building around it.

The Trump administration’s repeated tariff threats against BRICS members for “de-dollarization” arguably did more to motivate alternative-payment-system construction than any Russian or Chinese initiative could have on its own.

So the race is not as simple as U.S. versus China. It is a contest in which the dominant power, the United States, is winning on infrastructure expansion while at the same time creating the political conditions that push counterparties to keep building alternatives. And it is one in which the challenger, China, is building a real, scaled alternative for a narrower slice of the world even as its broader currency, the renminbi, stays structurally constrained by capital controls and limited convertibility.

What the EU and the rest of the world are doing

The two-power framing of “U.S. versus China” is the loudest version of the race, but it is not complete. Two other actors matter.

The European Union has its own model, anchored by the Markets in Crypto-Assets regulation (MiCA), which has been in phased application since 2024. MiCA created a comprehensive licensing regime for stablecoin issuers operating in the EU and is widely considered the most carefully designed regulatory framework of the three. The European Central Bank is also developing a digital euro on a slower timeline, with implementation realistically running into 2027 and beyond. The euro’s share of global FX reserves has actually grown in 2025 as central banks diversify out of dollars, but the eurozone’s structural weakness, a shared currency without a shared treasury, limits how far the digital euro can carry the bloc’s monetary ambitions.

Other CBDC projects are real but smaller. The Bahamas, Jamaica, and Nigeria have launched retail CBDCs with mixed adoption. India’s UPI-linked CBDC pilot is one of the most operationally significant in the developing world. The UK and Japan are advancing slowly on their own digital currency designs. None of these projects threatens the dollar-yuan binary, but several stretch the architecture of state-backed digital money beyond the two superpowers.

The most interesting wildcard is the Global South. Stablecoins, particularly USDT, have quietly become a de facto financial layer in dozens of countries where local currencies are weak or banking is shallow. The 400 million-plus users who now rely on dollar-backed stablecoins are mostly outside the U.S., and many are in jurisdictions where their own governments would, politically, prefer they not use the dollar. The American digital-dollar empire is being built largely by people who do not live in America.

What actually matters from here

Three things to watch over the next two to three years will tell you which way this race is bending.

The first is how the e-CNY’s interest-bearing transition affects cross-border adoption. If digital yuan deposits become an attractive store of value in countries that already do significant trade with China, the dollar’s grip on those corridors weakens. If the transition is mostly a domestic event and the e-CNY remains a thin layer for cross-border trade between China and a handful of allies, the dollar holds.

The second is whether the United States can keep stablecoin expansion uncoupled from political backlash. The Hudson Institute and other Washington policy shops are openly arguing for stablecoin promotion as a counter to BRICS. That framing, useful in policy memos, becomes a liability the moment foreign governments start to see USD-pegged stablecoins as instruments of U.S. strategy rather than neutral infrastructure. The current strategy works because it does not look like a strategy. The moment it does, the political costs of using it rise sharply in target jurisdictions.

The third is the technology layer. The next decade of payments will involve programmable money, AI agents transacting on their own, tokenized real-world assets, and settlement networks that move money in seconds at near-zero cost. The system that wins those use cases at scale wins the next layer of finance. The U.S. has more developer momentum, more capital, and more open networks. China has more state coordination, more captive trade flows, and a willingness to mandate adoption that no democratic system can match. Both edges matter.

What this means in the end

The crypto industry has spent a decade explaining itself to outsiders as a fight between competing technologies. Bitcoin or Ethereum. Proof-of-work or proof-of-stake. Layer one or layer two. Those are interesting debates, and they will continue. But they are debates inside a smaller story.

The bigger story is that two states have realized digital money is now a geopolitical instrument, and they are competing to define what it looks like. The United States is using regulated private stablecoins to spread the dollar at internet speed into the global digital economy. China is using a state-issued, interest-bearing digital currency and a parallel settlement network to build an exit ramp for the share of world commerce that wants one. Every other digital money story is, in one way or another, downstream of those two strategies.

For an investor, the implication is that the assets sitting closest to that geopolitical contest, dollar stablecoin issuers, infrastructure providers, payment rails, on/off-ramp networks, will likely matter more over the next decade than the latest layer-one token battle. For a holder of any cryptocurrency, the implication is that the regulatory environment your asset operates in is being shaped by considerations far larger than crypto itself. The CLARITY Act will pass or not pass partly based on how policymakers read the U.S.-China contest. The GENIUS Act was already passed partly because of it.

For everyone else, the implication is simpler. The future of money is being decided right now, not in white papers or token launches but in central bank press releases and Treasury speeches. The next time you read a thread about whether Bitcoin or Ethereum is the future, remember that both of them will end up settling, on the margin, in dollar-pegged stablecoins or yuan-denominated CBDCs. The interesting question is not which crypto wins. It is which currency?

The race that matters is not Bitcoin versus Ethereum. It is the dollar versus the yuan, in digital form, for the architecture of how money moves for the next hundred years. And it is happening right now, while almost nobody is looking at the right scoreboard.

This article is for informational purposes and does not constitute financial or investment advice. Geopolitical and monetary policy developments evolve quickly; the figures and policy positions described reflect reporting available as of mid-May 2026. Always do your own research.