Financial encyclopedia

How does the United States reconstruct its financial hegemony with virtual currencies?

In May 2025, the United States Senate passed the GENIUS Act, establishing a national regulatory system for dollar-pegged stablecoins. This move is regarded as the strategic deployment of the United States to continue debt financing with digital financial instruments and consolidate the global dominance of the US dollar.

At present, the total amount of US national debt exceeds 35 trillion US dollars, and the daily interest expense is as high as 2.3 billion. The bill may become a disguised "digitalization of US debt refinancing" mechanism.

Issuing currency = helping the United States buy bonds?

The GENIUS Act stipulates that all eligible stablecoin issuers must keep 100% of their reserves in cash equivalent to US dollars or US Treasury bonds. In other words:

Purchase a stablecoin

The issuing institution must purchase one dollar of Treasury bonds or deposit cash

The US Treasury Department can obtain a new round of financing

If the issuance volume expands from the current 200 billion US dollars to the expected 2 trillion, it means that global funds will provide the United States with a huge, low-interest and continuous source of funds.

Stablecoins are rewriting the rules of capital flows

24-hour operation and real-time settlement

Support point-to-point transfer without going through a bank

It can be used for payment, value storage and investment, and has permeated into daily scenarios and the capital market

Stablecoins bypass traditional financial regulation and sanctions, opening up a more flexible global expansion channel for the US dollar.

What is the logic behind the promotion?

Reduce the pressure of bond issuance and stabilize interest rates

It is not equivalent to QE and does not pose an inflation risk

De-banking and promoting the digitalization of the circulation of the US dollar

Reconstruct the US dollar settlement system to counter the monopoly of SWIFT

Many viewpoints hold that this will become the "Bretton Woods System 2.0" : the dollar's hegemony will be jointly supported by US Treasuries and stablecoins.

The risks still exist.

For the banking system: or weaken the deposit and credit base

For investors: There is a risk of misappropriation or bankruptcy of the issuing institution, and the assets may not be recoverable

To regulatory authorities: If there is a run on the bank or a crisis of trust, it may trigger systemic turmoil

In the face of the rapid expansion of stablecoins, investors need to pay attention to both technological development and institutional changes simultaneously. Stablecoins may have created a faster track for the US dollar, but where it runs and whether it can reach it safely still depend on whether trust and regulation can move forward in tandem.