On July 18, 2025, U.S. President Trump officially signed the "Guidance and Establishment of the U.S. Stablecoin National Innovation Act" (referred to as the GENIUS Act) at the White House, marking the first establishment of a federal-level stablecoin regulatory framework in the United States. At the signing ceremony, Trump declared, "This is one of the greatest transformations in financial technology since the advent of the internet," and jokingly referred to the acronym GENIUS as "named after me" — this statement quickly sparked heated discussions on social media, with netizens humorously dubbing it the "Big Smart Act."
Core of the Bill: 100% Reserve Requirement and Transparent Regulation
Stablecoins, as cryptocurrencies pegged to the value of the US dollar, have long lacked unified regulation. The recent "Genius Act" directly addresses the industry’s pain points and establishes three core rules:
- 100% asset collateralization: Requires that for every 1 dollar of stablecoin issued, an equivalent amount of dollars or short-term US Treasury bonds must be held in reserve.
- Monthly disclosure mechanism: Issuers must publicly disclose the composition of reserve assets each month, accepting public scrutiny.
- Open bank access: Allows traditional financial institutions such as banks and credit unions to directly issue stablecoins.
On the day the bill was signed, the market value of the world’s largest stablecoin USDT surpassed 160 billion dollars, with its holdings of U.S. Treasury bonds reaching 127 billion dollars, making it the 18th largest holder of U.S. debt globally, alongside sovereign nations such as Germany and South Korea.
This regulatory framework brings the current $260 billion stablecoin market under federal jurisdiction, clearing obstacles for future explosive growth. According to Standard Chartered, the market size could exceed $2 trillion by 2028.
Political Economy: The Dual Solutions of the Debt Crisis and Dollar Hegemony
Trump bluntly stated at the signing ceremony: "Stablecoins will ensure the position of the dollar as the world reserve currency - losing this position would be comparable to losing a world war." This statement reveals the deeper strategy behind the legislation:
- Resolving US Debt Pressure: Forcing stablecoins to anchor to US debt, creating a "new necessity." Currently, 90% of the global stablecoin market share is held by USDT and USDC, and their continued accumulation of US debt can alleviate government financing pressure.
- Penetrating Emerging Markets: In Southeast Asia, Africa, and other regions, stablecoins have become a cross-border payment tool for small and medium-sized enterprises, replacing the traditional SWIFT system. This "informal dollarization" accelerates the penetration of the dollar in financially weak areas.
- Countering the impact of digital currencies: Former Fed Governor Raskin pointed out, "As central banks around the world advance digital currencies, the U.S. chooses to weaponize privately issued digital dollars, which is a technical upgrade of dollar hegemony."
Dramatically, Trump admitted during his speech that another motive for supporting cryptocurrencies was, "I also do it for the votes," which sparked laughter throughout the audience. Data corroborated this statement — during the 2024 election, political donations from the crypto industry exceeded $245 million, primarily flowing to candidates supporting the bill.
Controversy Vortex: Conflicts of Interest and the "Gray Rhino" of Global Finance
Despite the bill receiving bipartisan majority support (Senate 68:30, House 308:122), criticism has not ceased:
- Regulatory loophole: Tech giants are not prohibited from issuing stablecoins, and the business activities of officials’ relatives are not covered. Democratic Congresswoman Waters criticized: "The World Liberty Financial company, controlled by the Trump family, just issued a USD1 stablecoin, and the bill paves the way for their wealth accumulation."
- Financial stability concerns: Andrew Bailey, the Governor of the Bank of England, warned that a decoupling of large stablecoins could trigger a wave of selling in U.S. Treasuries, undermining the cornerstone of national credit.
- Cross-border regulatory dilemma: The Bank for International Settlements points out three major flaws of stablecoins: lack of central bank backing, weak anti-money laundering measures, and lack of credit functions. In developing countries with high inflation, this may trigger capital flight and local currency collapse.
The EU Central Bank report warns further: if the US dollar stablecoin monopolizes the market, the Eurozone’s payment sovereignty will face the risk of being undermined. The Italian finance minister has urgently discussed defense plans.
Future Outlook
The battlefield of stablecoins has transcended technological competition and become a new tool for the great powers’ financial sovereignty. When USDT holds U.S. Treasury bonds equivalent to the level of South Korean sovereignty, and Trump raises the "GENIUS" bill at the signing ceremony, declaring "America will become the capital of the crypto world," the watershed moment in financial history has already emerged.
In the next decade, we will witness a contest between two models: the United States relying on private capital to expand the "digital dollar," while Hong Kong explores a new path for the internationalization of the renminbi with multi-currency stablecoins. As analysts in the City of London have stated: "Whoever sets the rules for stablecoins will control the arteries of the next generation global payment network.
