President Donald Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) into law, marking a new era for digital dollars. Supporters say stablecoins will drive demand for U.S. Treasuries, push down interest rates and reinforce the dollar's global reserve role. But can they deliver?
What Are Stablecoins?
Stablecoins are cryptocurrencies pegged to assets like the U.S. dollar at a 1:1 ratio, designed to avoid the volatility that defines tokens like Bitcoin and Ether. Under the GENIUS Act, issuers must hold liquid reserves—U.S. dollars or short-term Treasury bills—and publish reserve breakdowns monthly.
Market on the Rise
Since their emergence around 2014, stablecoins have ballooned from a market cap of about $20 billion in 2020 to roughly $247 billion today. USDT and USDC alone account for nearly 90 percent of this total. The U.S. Treasury forecasts a potential climb to $3.7 trillion by 2030.
Strategic Stakes
An analysis from China Media Group notes that digital currencies challenge the dollar's influence. By backing stablecoins, the U.S. aims to harness existing strengths and shore up its dominance in global payments. Supporters claim this move will ease future debt pressures and keep the dollar at the forefront of finance.
Behind the Scenes: Lobbying and Politics
The path to the GENIUS Act also reflected heavy lobbying. Industry data shows pro-crypto candidates—supported by over $245 million in last year's political donations—helped shape the final law. Critics warn this influence could leave loopholes in areas like anti-money laundering protections and foreign issuer bans.
Challenges Ahead
Critics point out that the dollar's prestige is built on credibility and steady international engagement, not simply branding. Without consistent trade partnerships and reliable policy commitments, stablecoins may struggle to secure the dollar's future.
The Road Ahead
As the U.S. rolls out its stablecoin rulebook, the industry will watch closely. Will regulated digital dollars reshape finance and cement U.S. monetary power? Or will the real-world challenges of trust, compliance and global cooperation prove too steep?
Reference(s):
cgtn.com
