Worldwide Dollar Hegemony Reinforced by Stablecoins
The Senate is gearing up to vote on the GENIUS Act, a bill aimed at regulating stablecoins, as early as August, according to President Trump. This move comes after a Digital Asset Summit held by the White House in March, where US crypto entrepreneurs met with the Trump administration.
The GENIUS Act, currently underway in the Senate, seeks to ensure that stablecoins, digital assets pegged to traditional currencies, are issued on US soil. The CEO of Circle, the issuer of the second-largest stablecoin USDC, has hailed the Act as a "home run" and a "huge step forward" in creating regulatory clarity for stablecoins.
However, not all stablecoin issuers may find the Act favourable. Paolo Ardoino, CEO of Tether, the issuer of the stablecoin USDT, has expressed concerns about the Act's implications for international operations. Ardoino suggests that Tether may face difficulties complying with the GENIUS Act due to its global reach, particularly in regions like Africa and South America.
The US government, along with the "Office of the Comptroller of the Currency" and the IRS, will develop a regulatory "stablecoin regime" under the GENIUS Act. This regime will impose various obligations on stablecoin issuers, including publishing monthly liquidity reports, regular public audits, full backing by US dollars or highly liquid assets, ensuring immediate redeemability, and compliance with the Bank Secrecy Act.
USDC, the second-largest stablecoin, has already largely complied with the requirements of the GENIUS Act. Algorithmic stablecoins like Maker Dollar, however, have little chance of being approved under the Act.
David Sacks, Trump's "Crypto Czar," believes that stablecoins will enhance the international dominance of the dollar. Finance Minister Scott Bessent has also stated that the US government intends to use stablecoins to maintain the US dollar as the dominant reserve currency. The chairman of the Senate Banking Committee believes a regulatory framework for stablecoins is crucial to strengthen the global position of the dollar.
Coinbase, a major player in the crypto industry, has not yet issued an official statement regarding the GENIUS Act. Ardoino, CEO of Tether, has highlighted the challenges an international stablecoin company like Tether faces within the US regulatory framework under GENIUS, including navigating diverse regulatory requirements and compliance complexities.
As the Senate prepares to vote on the GENIUS Act, the future of stablecoins and their role in the global financial landscape remains uncertain. The Act, if passed, could bring much-needed regulatory clarity to the stablecoin market, but it may also pose challenges for international players like Tether. The situation will be closely watched as the summer approaches and the vote on the GENIUS Act draws near.
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