It has been just a few months since my lengthy exposé on stablecoins, but events of a decade’s worth have transpired in the Blockchain world. The path to widespread adoption of Blockchain technology has been debated, and in recent years, concepts like Non-Fungible Tokens (NFTs) and DeFi platforms have all staked a claim to this. However, it’s now undeniable that stablecoins will achieve this and herald a new dawn for the ecosystem. It is only right that this phenomenon carries the torch; it has an uncanny similarity to existing systems but also provides a massive advancement in terms of security, speed, and transparency. Stablecoins are at a point where it’d be utter foolishness for the suits parading along the White House, Kremlin, Downing Street and the likes to ignore outright and just as the battle for Artificial Intelligence supremacy rages on, another battle is being fought with regards to dominating the stablecoin ecosystem and the biggest bullet so far just got fired by the ever-polarizing President Trump with the GENIUS Act. This acronym, which stands for the Guiding and Establishing National Innovation for U.S. Stablecoins Act, is a bill that utterly reshapes the digital currency framework in the world’s strongest economy while also positioning the United States Dollar as the long-term strategic reserve for stablecoins around the globe. With regards to this vision, it can be clearly seen that there is an existing advantage, given the dominance of USD-backed stablecoins at the moment. The USDT minted by Tether and USDC from Circle are the two dominant stablecoins in circulation, and they share a few things in common: first is the fact that a proven USD reserve in form of either treasury bills or cash backs them and the second which we will investigate down the line given its crucial importance regarding the GENIUS act is the fact that they are FIAT pegged and not algorithmic in any form.
In Southeast Asia, the Hong Kong stablecoin bill, which is viewed in some circles as an extension of the Chinese Belt and Road Initiative, was also passed successfully, and this act offers a strategic alternative to the Genius Act and its vision, which is a pathway to sustained US Dollar dominance. The hegemony of the US dollar has been under fire in recent times, with the BRICS nations attempting to dissolve this and usher in a new financial system that is not solely dependent on the currency and the SWIFT network. The emergence of the stablecoin system, which is faster, more secure and operational without the downtime limitations occasionally associated with SWIFT, provides a launchpad for this ambition. The GENIUS Act is the United States showing its hand and making it clear that it will not be idle and watch as this well-thought-out plan comes into fruition. Given its existing dominance, you won’t be wrong to conclude that the US is well placed to win this war, but it could be too early to call.
After a series of coordinated attacks on the feasibility of a decentralized framework powering the financial system, most especially from existing juggernauts, the writing on the wall has been made clear, and firms opposing the revolution face the risk of being left behind. As a result, the race that has been run in the shadows is now in the light due to the GENIUS Act. Big Finance companies are now expressing their desire to fully integrate stablecoins, with some open to using existing ones, while some are exploring pathways to create their unique stablecoins. Regardless of the path taken, the delusion that came with their initial stance of maintaining the predated system of money as it was, is now unravelling. Unbeknownst to all involved, the landscape of finance changed the very day that Satoshi Nakamoto published the Bitcoin White Paper, which was the spark that lit the fire. The GENIUS Act makes a provision at its core that enables the United States to exert, to a degree, influence on the flow of stablecoins while ensuring the continuation of the US dollar’s dominance. This aim is disguised as an attempt to ensure compliance and regulation, but behind the veil is a well-defined strategy centred on ensuring financial domination. How? You may ask. How does a misstep with stablecoins possess the power to alter the fortunes of the almighty Dollar? Well, at the moment, there are billions of USDT and USDC in circulation, with each single digital dollar backed by an equivalent physical dollar of the same value. With the inevitable rise of stablecoins as a means of payment, settlements, and cross-border transfers, there is undoubtedly going to be more digital currencies funnelled into this network and making the US dollar the cornerstone ensures an increase in demand. This establishes the dominance of USD-pegged stablecoins and, in turn, maximises the need for the US dollar.
Stablecoins can help lift bottlenecks associated with the present traditional way of sending payments, both within a nation and cross-border payments. The current issues plaguing international payments include the long wait for settlement using the SWIFT network, as well as the charges associated with this. It is not a rarity for cross-border payments to take a couple of days without settling, in contrast to the few seconds that it would when using the stablecoin payment rails. This is an intriguing proposition because, for all the clamour about boosting the speed, eliminating the charges is not something gargantuan financial institutions are likely to cherish. This is a big question we’re likely to see unfold over time after the executive recognition of stablecoins. It is expected that existing finance giants will adjust to the new reality, but it will be very interesting to see this play out in real time.
The GENIUS Act aims to ensure that stablecoins can only be issued by financial firms designated as a Permitted Payment Stablecoin Issuer (PPSI). This allows banks and credit unions to integrate existing systems or chart their course, but most importantly, it provides a legal framework for oversight. From a certain lens, it can easily be deduced that this has no immediate impact on the normal user who has engaged in the normal transfer or receipt of stablecoins, irrespective of jurisdiction or region. Regardless, it is a huge breakthrough for nations to finally acknowledge the elephant in the room, which is the fact that the revolution can only be delayed and not denied. The GENIUS Act is truly genius, not because it causes a drastic change or that it makes cryptocurrency activities smoother, but it is a genius stroke because it comes off as an act to secure and strengthen regulatory statutes while shielding its intention, albeit poorly, which is a long-term domination of the United States Dollar in the far ranging worldwide financial landscape.
