— A Second Look at the U.S. “GENIUS Act” on Stablecoins
After publishing “Will the Stablecoin Act Trigger a Financial Tsunami?”, I received a stream of reader feedback. Many agreed with the article’s assessment of the bill’s flaws: “the current method of issuing stablecoins clearly presents three major risks: lack of a backstop mechanism, lack of transparency in fiat-backed assets, and non-uniform naming of issued stablecoins. The backstop issue isn’t technical, while the latter two can be resolved through technology.”
They also supported the solutions I proposed, believing that transparent stablecoins could simplify regulation. What readers were most curious about was the basis for the statement: “the U.S. pursues dollar hegemony, while Hong Kong pursues becoming a financial center.” They wanted me to clarify these two issues.
Hong Kong’s pursuit of becoming a financial center is quite understandable. What intrigued readers more was how the U.S. pursues financial hegemony.
U.S. Debt Surge and Sanctions Fuel De-Dollarization
By early 2025, U.S. national debt had reached $37 trillion, with foreign investors holding $9.05 trillion. China significantly reduced its holdings to $756.3 billion, dropping to third place. From 2023 to June 2025, China increased its gold reserves by 267 tons, reaching 2,298 tons. During the same period, global central banks collectively added 2,500 tons of gold. This surge disrupted the balance of gold demand, causing prices to soar. It reflects a collective distrust of the dollar by central banks worldwide—essentially, a lack of confidence in America’s ability to repay its debts.
Currently, U.S. debt equals 130% of its GDP. In 2024, interest payments on the debt reached $1.1 trillion, and projections for 2025 suggest it will again hit $1 trillion. With $9 trillion in debt maturing in 2025, refinancing at interest rates above 4.5% would impose a massive fiscal burden. This is a key reason why countries are increasingly wary of U.S. debt.
America’s financial sanctions against Russia and threats of sanctions against Chinese banks are stark, prompting these nations to band together. This has led to the emergence of alternative systems like BRICS Pay, spearheaded by China, and China’s Cross-Border Interbank Payment System (CIPS). According to data from Niuniu Research, as of May 2025, the U.S. dollar accounted for 48% of global payments. Meanwhile, in April 2025, the renminbi’s share in China’s cross-border settlements surpassed 54% for the first time, while the dollar’s share fell below 43%. In other words, the volume of China’s trade settled in dollars has declined.
As China’s payment systems continue to grow and threaten the dollar’s dominance, the U.S. has responded with tariffs, financial sanctions, and media pressure to intimidate countries considering joining these alternative systems. But as the saying goes, “The green hills cannot block the river’s eastward flow”—the decline of the dollar’s global status is inevitable.
America’s Choice Amid Difficulty
Although the dollar’s dominance in fiat currency competition is beginning to waver, it remains far ahead in stablecoin settlement volume. As of July 2025, the U.S. dollar holds an overwhelming lead in stablecoin issuance, commanding nearly 99% of the market share. This has created a new global payment landscape centered around dollar-based stablecoins—America’s absolute home turf.
Stablecoins offer high global payment efficiency. Traditional cross-border payments take days to settle, while stablecoins enable near-instant transactions and reduce costs by over 90%. In regions with underdeveloped banking infrastructure, Tether (USDT) has deeply penetrated the market, expanding the use of dollar-based stablecoins.
The defining feature of stablecoins is their alignment with the nature of the internet. Today, there are 5.5 billion internet users, with developed countries reaching 91% population coverage. The peer-to-peer payment model eliminates intermediaries—including commercial banks and even central banks. The “Genius Act” marks the beginning of a banking revolution.
The U.S. made concessions to banks: only licensed banks are allowed to issue stablecoins. This move united the banking sector to maintain financial stability, and American banks responded swiftly. According to Deepseek data, Table 1 shows the overwhelming dominance of the U.S. financial sector:
Table 1: U.S. Financial Dominance
| Metric Category | U.S. Share | Global Comparison |
| Central Bank FX Reserves | 60.8% | Euro: 20.5%, RMB: 1.9% |
| Trade Settlement Currency | 54% | Dominates energy and commodity transactions |
| International Bond Issuance | 70% | Absolute dominance |
| Number of Millionaires | 40% (28.83M) | China: 6.33M (2nd place) |
| Stablecoin Market Share | 99% | Euro stablecoins: only 0.2% |
Large U.S. non-bank corporations can issue dollar stablecoins in Hong Kong. For example, Facebook has 3 billion users, and YouTube has 2 billion—America also dominates the internet market.
In other words, once the financial sector enters the internet realm, the U.S. holds dominant positions in both finance and market reach. It doesn’t need a revolution from its rivals—its own issuance of stablecoins is a revolution that surpasses any competitor’s efforts.
America’s opponents aim to defeat it through fiat currency, but stablecoins represent a move that transcends that battlefield. “You fight your fiat war, I fight mine—I won’t engage in your currency war, I’ll open a new front.” By leveraging its absolute advantages, the U.S. reaches users directly through peer-to-peer channels, undermining its rivals at the foundation.
User behavior is voting with their wallets: internet companies are defeating traditional firms, and crypto finance is overtaking traditional finance. This scene will replay in the financial sector. Since the emergence of the TCP/IP protocol in 1983, the internet has served as a tool for traditional finance. But with the launch of Bitcoin on January 9, 2009, the era of financial decentralization began. The U.S. “Genius Act” aligns with this historical trend. The result? Slow-moving banks and financial institutions will be the first to fall.
The possibility of traditional finance defeating crypto finance is zero. All countermeasures are futile—the outcome is already decided. This is America’s winning move, a truly “genius” strategy. The word “genius” here embodies America’s open ambition to unify the world.
The Secret Behind the “Genius Act”
1. The Genius Act Builds a Wall against Competition
Most countries are unprepared for the coming transformation in global finance. The emergence of the Genius Act marks the beginning of a financial “dimensionality reduction strike.” According to internet logic, only the dominant player survives. As a result, all sovereign currencies become targets. This is the free choice of the global population. The collapse of sovereign currencies will inevitably begin with weaker nations. The next decade will be shaped by competition among a few dominant stablecoin issuers.
Only two major players are capable of competing with the U.S.: China and Europe.
The European Central Bank (ECB) does not issue bonds directly; it releases liquidity by purchasing member states’ bonds. Its policy tools are anchored to a 2% inflation target. The eurozone is well-suited for issuing stablecoins under a unified name—“euro.” The ECB functions similarly to Hong Kong’s Monetary Authority, though with different regulatory mechanisms. The eurozone is ideal for issuing transparent stablecoins, as I discussed in “Will the Stablecoin Act Trigger a Financial Tsunami?”. Issuing a central bank digital currency (CBDC) in Europe would be a mistake, which explains the delays in its rollout. Europe has favorable conditions, but its slow pace may cause it to miss the opportunity. Japan and the UK also meet the conditions for issuing transparent stablecoins, as outlined in my afore-mentioned article.
China’s challenge is capital controls—a deadlock. Without resolving this, China cannot even qualify to compete. However, China could adopt a eurozone-style model for unified stablecoin issuance by leveraging Hong Kong as a gateway. This wouldn’t require changing existing regulations but would unlock the deadlock of capital control. It’s China’s only hope.
If a country cannot, like the U.S., revolutionize itself to join this competition, the result will be: “Across the river, the song of the rear garden still lingers” (A metaphor for being left behind).
2. Do We Still Need the Federal Reserve?
If stablecoins are issued directly and backed by U.S. Treasury bonds, do we still need the Federal Reserve?
In my articles “From Peer-to-Peer Cash Systems to a Bubble-Free Financial Systems” and “Postscript: A New World Needs a Stable Financial Yardstick”, I systematically argue why central banks—including the Fed—may no longer be necessary. In my “Bitcoin-Dollar Standard” series, I still included the Fed, but my thinking was limited. Compared to directly backing stablecoins with Treasuries, the Genius Act is more “genius.”
Their approach—using Treasuries as anchors—is similar to my idea of using Bitcoin as an anchor. In their model, stablecoins are backed by Treasuries, bypassing the Fed entirely. This gradually fixes the supply of dollars. The market, not the Fed, determines demand for Treasuries. Treasury issuance becomes the mechanism for maintaining stablecoin price stability. This is the underlying financial logic of the Genius Act. Of course, if dollar demand persists, the Fed may still have a role.
3. How Much U.S. Debt Do We Need?
Assume the Fed is gone and the world uses dollars and Treasuries as anchors. Treasury issuance could then measure GDP growth, while stablecoins serve as the yardstick—issued in proportion to global purchasing power.
According to the Fisher Equation: MV = PT,
where:
– M = base money
– V = velocity of money (multiplier)
– P = price level
– T = total transactions
With stablecoins, V becomes unknown—transaction speeds have gone from days to seconds, increasing efficiency by orders of magnitude. One thing is clear: GDP growth correlates with Treasury issuance. Market demand automatically determines how much debt is needed. When stablecoin prices rise, more Treasuries can be issued to stabilize them. This was previously the Fed’s job.
Compared to my Bitcoin-standard proposal, this dual-variable system (dollar + stablecoin) is more complex—but still superior to the Fed’s monthly monetary fund adjustments. Stablecoin markets adjust in seconds, not months. For more on automatic adjustment mechanisms, readers can refer to “Implementation of DW20 Decentralized Standard currency”. Of course, even without the Fed, financial bailouts may still be necessary—that’s another topic. The Fed’s transitional role is also worth exploring.
Once Treasuries become the backing asset, their issuance will naturally grow with the economy. Elon Musk opposed the U.S. “Big and Beautiful Act” because Trump didn’t share this secret with him. Musk didn’t realize that Treasuries behind the dollar aren’t just America’s debt—they’re a way to collect seigniorage from the entire world.
4. America Unifies the Financial Landscape
The above analysis stems from my years of research on cryptocurrency—over 700,000 words published on the Chainless website. America’s strategy aligns with many of my ideas. My proposed three-step roadmap for future finance is reflected in U.S. policy:
– Step 1: Strategic Bitcoin reserves — later echoed in Senator Lummis’s proposal
– Step 2: Bitcoin-Dollar Standard — Corresponding to the U.S. “Genius Act,” in which Congressman Loomis was also involved.
– Step 3: Ultimate Bitcoin Standard — the final destination
Their legislative logic is sound. While the bill has flaws that need iterative refinement, its direction is promising and will greatly benefit humanity. Step 2 (Bitcoin-Dollar Standard) is necessary, but not the endgame. Step 3—the full Bitcoin Standard—is the ultimate solution.
Bitcoin Standard Is the Ultimate Solution
From the perspective of cryptocurrency practice, the U.S. approach is a centralized issuance model. Stablecoins are not equity tokens, and as consensus tokens, they struggle to gain broad market acceptance. Former Governor of the People’s Bank of China, Zhou Xiaochuan, once stated: “the ideal reform of the international monetary system is to create a reserve currency that is decoupled from sovereign states and can maintain long-term value stability—thus avoiding the inherent flaws of sovereign credit currencies as reserve assets.”
Bitcoin, as a reserve currency, meets the conditions outlined by Mr. Zhou. A detailed analysis can be found in ““From Peer-to-Peer Cash Systems to a Bubble-Free Financial Systems”. In contrast, the U.S. dollar and Treasury bonds do not meet these criteria.
Treasuries are still backed by credit and operated by a centralized authority. Human greed cannot be restrained. Chinese scholar Guo Jianlong wrote in 《The Fiscal Code of the Central Empire》: “as long as paper currency is monopolized in issuance, governments will naturally use it to subsidize fiscal spending. No matter how people try to prevent it, they cannot stop it. When fiscal imbalance occurs, simply turning on the printing press solves the problem—this temptation is irresistible.”
Centralized issuance is unlikely to gain global or public approval.
Bitcoin is decentralized and has already earned growing recognition worldwide. Inflation is obvious, savings no longer preserve value, and hard work no longer guarantees wealth—this is the shared reality of our era.
Let’s revisit what Satoshi Nakamoto said about why Bitcoin would succeed: “I chose a fixed monetary base to ensure early adopters would receive a windfall when Bitcoin became popular. This also attracted those who distrust arbitrary government monetary policies.”
Satoshi identified the chronic flaws of fiat systems and sought to address them. However, Bitcoin is not a complete currency—it’s more like gold, a consensus-based store of value. Bitcoin needs a complementary unit of account with similar characteristics: a decentralized standard currency. A standard currency serves as a pricing unit—currently, that’s the U.S. dollar. But the dollar’s flaws lead to economic bubbles and cyclical volatility.
Readers can refer to “Implementation of DW20 Decentralized Standard currency” for how to construct a decentralized standard currency to pair with Bitcoin, thereby realizing a Bitcoin Standard. History follows its own natural course—the details may vary, but the direction aligns with my predictions. The Genius Act marks the second major milestone in Bitcoin’s evolution. Outstanding politicians, financial experts, and entrepreneurs are stepping onto the stage to build a fairer human society.
Based on deep analysis of cryptocurrency, we’ve launched a complementary unit of account for Bitcoin: the Decentralized Standard currency DW20. It unfolds in three phases: Consensus Token Phase, Stablecoin Phase and Base Currency Phase.
We are currently in the consensus phase, with distribution via registration-based airdrops. Over 710,000 people have registered in just over a year. Interested readers can visit the official website for more details and airdrop download links:
Official website: https://www.chainlessdw20.com
This fills the gap in Bitcoin’s functionality, completing the Bitcoin Standard. The article “Postscript: A New World Needs a Stable Financial Yardstick” offers a full interpretation of this ultimate solution.
We’ve also launched a universal community software called SimiTalk, which uses currency as a bridge between public and private domains:
Download website: https://www.simitalk.top/
These are what future society needs.
