The Rise and Challenges of Cryptocurrency: Global Trends and Strategic Implications

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The rapid evolution of cryptocurrency has become one of the most transformative forces in the global financial landscape. At the 2025 China Academic Conference on Digital Economy Development and Governance held at Nankai University, President Chen Yulu delivered a keynote address titled “The Rise and Challenges of Cryptocurrency,” offering a comprehensive analysis of the technological, economic, and geopolitical dynamics shaping this digital revolution.

Understanding Cryptocurrency: Types and Core Features

Cryptocurrency is a digital currency that operates through computer networks, with ownership recorded on decentralized digital ledgers—most commonly blockchain technology. At its foundation lies consensus mechanisms such as Proof of Work (PoW), which ensure security and trust in transaction validation.

There are three primary types of cryptocurrencies:

These assets exhibit seven defining characteristics:

From its origins in 2009 with the mining of Bitcoin’s Genesis Block by Satoshi Nakamoto, cryptocurrency has evolved from an experimental concept into a recognized component of the global financial ecosystem. Today, over 130 countries are actively discussing or integrating various forms of digital assets into their financial frameworks.

👉 Discover how digital assets are reshaping global finance today.

The Global Shift: U.S. Strategy and the Digital Dollar Ambition

In recent years, the United States has undergone a strategic transformation in its approach to digital assets. What was once a stance of regulatory skepticism has shifted toward proactive integration and institutionalization.

A landmark moment occurred in January 2024 with the approval of spot Bitcoin ETFs—a pivotal step in bridging traditional finance with crypto markets. By December 2024, Bitcoin surpassed $100,000 per coin, propelling total crypto market capitalization from $800 billion to $3.4 trillion within just two years. The share of crypto assets relative to G6 central banks' liquidity rose from less than 1% in 2009 to 12% by the end of 2024.

This shift reflects a broader U.S. strategy aimed at extending dollar dominance into the digital era. The Trump administration’s proposal for a Strategic Bitcoin Reserve (SBR) signals a move to treat Bitcoin as a strategic asset—akin to gold in the Bretton Woods system.

Five key shifts highlight this transformation:

  1. Regulatory Evolution: U.S. financial regulators have moved from suppression to “guidance-based regulation.” The appointment of pro-crypto leadership at the SEC, along with cross-agency coordination, reflects a new balance between innovation and investor protection.
  2. Legislative Support: Congress is advancing two major bills—FIT21 and GENIUS—that will establish a clear legal framework for digital assets and stablecoins. FIT21 clarifies jurisdictional boundaries between the SEC and CFTC, while GENIUS aims to regulate dominant stablecoins like USDT and USDC.
  3. Strategic Asset Adoption: The proposed SBR would position Bitcoin as a national reserve asset, reinforcing dollar hegemony while limiting competition from foreign CBDCs through executive orders banning their promotion within U.S. jurisdiction.
  4. Corporate Integration: Major firms like Apple, Tesla, and MicroStrategy have added Bitcoin to their balance sheets. BlackRock’s IBIT ETF alone holds 45% of all ETF-held BTC, with total spot Bitcoin ETF inflows exceeding $108 billion in 2024.
  5. Tax Policy Adjustments: The IRS introduced flexible accounting methods for crypto taxes in 2025, easing short-term burdens while encouraging compliance through regulated platforms.

These developments point to a coordinated effort to build a “trinity” of digital dollar dominance: strategic Bitcoin reserves, dollar-pegged stablecoins, and U.S.-controlled financial infrastructure.

The European Approach: Regulation and Sustainability

While the U.S. focuses on strategic dominance, the European Union emphasizes regulatory coherence and environmental responsibility.

The Markets in Crypto-Assets (MiCA) framework came fully into effect on December 31, 2024, establishing a unified regulatory standard across EU member states. MiCA classifies crypto assets into three categories and imposes strict requirements on stablecoin issuers and exchanges, balancing innovation with consumer protection and financial stability.

Additionally, MiCA introduces carbon taxation on energy-intensive Proof-of-Work blockchains, incentivizing a transition to greener alternatives like Proof-of-Stake (PoS). This policy not only supports climate goals but also reshapes global mining geography.

Global Competition: CBDCs vs. Stablecoins

Around the world, central banks are responding to the rise of private digital currencies. Over 130 countries are now exploring or developing CBDCs. China’s digital yuan leads in scale and real-world application, while nations like Japan, South Korea, India, and Russia accelerate their own digital currency programs.

However, stablecoins maintain a significant advantage in adoption. Between 2020 and 2024, USDT’s market cap grew 5.52x and USDC surged 11.35x, together capturing 90% of the global stablecoin market. In 2024 alone, stablecoins settled $15.6 trillion in transactions.

This competition raises concerns about fragmentation in the global payments system. U.S. policies favoring dollar-based assets, combined with EU regulations that may restrict non-euro stablecoins, could lead to regional silos in digital finance.

Stablecoins: Bridging Traditional and Digital Finance

Stablecoins are emerging as a critical link between legacy financial systems and blockchain innovation.

They have outpaced the growth of U.S. M2 money supply between 2023 and 2024, demonstrating resilience in high-deficit environments and sustaining demand for dollar-denominated assets. In the first 11 months of 2024, stablecoins facilitated $27.1 trillion in transactions—many involving peer-to-peer and cross-border B2B payments.

Integration with platforms like Visa and Stripe underscores their growing legitimacy as mainstream payment rails.

👉 See how stablecoins are transforming cross-border transactions.

China’s Position: Strengths and Strategic Risks

China holds several advantages in the digital asset space:

Yet challenges remain:

Threats to Financial Sovereignty

The U.S.-led crypto strategy poses several risks to China’s financial security:

  1. Capital outflows and currency pressure: Dollar-centric crypto channels may facilitate capital flight and undermine RMB internationalization.
  2. DeFi regulatory arbitrage: Favorable U.S. policies attract global talent and capital, creating long-term technological advantages.
  3. Loss of technical standard-setting power: With Europe setting regulatory benchmarks via MiCA and the U.S. leading in core protocols, China risks marginalization.
  4. Geopolitical weaponization: The seizure of Russian crypto assets during the Ukraine conflict illustrates how digital finance can be used as a tool of sanctions enforcement.

Despite these threats, it's crucial to recognize that current crypto markets exhibit signs of speculative excess. A potential correction could disrupt even well-laid strategic plans.

👉 Stay ahead of market trends with real-time insights from OKX.

FAQ Section

Q: What is the difference between Bitcoin and stablecoins?
A: Bitcoin is a decentralized digital currency with high volatility and limited supply, often seen as “digital gold.” Stablecoins like USDT or USDC are pegged to fiat currencies (usually the U.S. dollar) to minimize price fluctuations, making them ideal for payments and value transfer.

Q: How do ETFs impact cryptocurrency adoption?
A: Spot Bitcoin ETFs allow traditional investors to gain exposure to crypto without holding private keys or using exchanges. Their approval marks institutional acceptance and increases liquidity and legitimacy in mainstream finance.

Q: Is China developing its own blockchain standards?
A: Yes, China promotes indigenous blockchain development through national initiatives and focuses on alliance chains for enterprise use. However, global interoperability remains limited due to regulatory differences.

Q: Can central bank digital currencies compete with private stablecoins?
A: CBDCs offer sovereign backing and regulatory compliance but lack the agility and global reach of established stablecoins. Success depends on international cooperation and user adoption incentives.

Q: What role does energy consumption play in cryptocurrency?
A: PoW-based networks like Bitcoin consume significant electricity, prompting regulatory scrutiny. The shift toward PoS models reduces environmental impact and aligns with sustainability goals.

Q: How might cryptocurrency affect global financial power dynamics?
A: By redefining reserves, payment systems, and regulatory influence, crypto could either reinforce existing hierarchies (e.g., dollar dominance) or enable multipolar alternatives depending on national strategies.

Keywords: cryptocurrency, blockchain technology, Bitcoin ETF, stablecoin adoption, digital yuan, financial sovereignty, DeFi innovation, crypto regulation