Renminbi vs USDT and Bitcoin: Beijing Builds Rails, Markets Build Workarounds

Pipes and Permissions: China can build speed, but not necessarily trust

China is on a mission: turn the renminbi into a heavyweight reserve currency. Sounds bold, like ordering dessert first. But the scoreboard is stubborn. As of the third quarter of 2025, the renminbi made up roughly 1.93% of global foreign exchange reserves—small potatoes next to the US dollar’s roughly 56.9% and the euro’s about 20.3% in a roughly $13 trillion pool.

Beijing has poured effort into the plumbing: faster payment rails, a beefed-up Cross-Border Interbank Payment System (CIPS) and a digital yuan built for cross-border pop-and-go settlements. CIPS handled enormous volumes in 2024 and now connects thousands of banks. The digital e‑CNY recorded billions of transactions and trillions of yuan passing through, and wholesale platforms like mBridge have processed billions of dollars in settlement activity. The tech is real. The rails are shiny.

But here’s the twist: central banks don’t buy reserves just because payment corridors are snazzy. They want assets that are liquid, convertible, and usable without asking anyone’s permission. China’s capital controls get in the way—big time. You can have the fastest highway, but if drivers aren’t allowed to leave the toll plaza without permission, they’ll keep taking the old routes.

History shows this: renminbi reserve holdings climbed from roughly $91 billion at the end of 2016 to about $337 billion in late 2021, then slid back as convertibility limits and caution set in. Methodology tweaks in IMF reporting make the long view a bit messier, but the headline is clear: faster rails don’t automatically translate into durable reserve demand.

Stablecoins and Bitcoin: the market’s sneaky detours

Where official channels hit a wall, markets improvise. Dollar-denominated stablecoins—those crypto coins pegged to the US dollar—have exploded into the role of offshore dollar wrappers that settle 24/7 and don’t ask for permission at the border. Circulating stablecoin supply is in the hundreds of billions, with reported estimates of international stablecoin flows running into the low trillions for recent years. In short: people use them to get dollar-like liquidity on demand.

Chinese exporters and traders increasingly use dollar stablecoins like USDT to dodge conversion headaches and capital-control friction. Anecdotes and market desks report a multi-fold rise in activity since the early 2020s. Meanwhile, the renminbi’s share of SWIFT-tracked global payments has dipped to under 3% in recent readings, while the dollar remains dominant. So while China builds a prettier, faster on-ramp for its currency, many market actors prefer a different express lane: dollar stablecoins.

Bitcoin also gets a seat at this table. It’s neutral, non-sovereign and immune to either Beijing’s capital controls or Washington’s banking pipes. For actors seeking an “outside” hedge or a permissionless route, Bitcoin fills a narrative role as digital outside money—uncontrolled, uncensored, and unapologetically global.

There’s also a practical middle path in play. Chinese tech firms and financial players have lobbied for tokenized offshore renminbi solutions and Hong Kong has moved toward licensing stablecoins, which could create a partly convertible, regulated on‑chain renminbi instrument. If it works, China could compete with dollar stablecoins without fully throwing open the capital account. If it fails, the status quo—dollar stablecoins and Bitcoin as the workaround—stays in place.

Bottom line: Beijing can build world-class rails and still lose the people-move-money vote if convertibility and trust aren’t on the menu. Each quarter that the capital account remains tightly controlled, crypto-based dollar alternatives and Bitcoin entrench themselves as the go-to solutions for quick, borderless settlement. The tech won’t replace sovereignty, but markets will happily route around it.