GENIUS Act Bolsters Dollar-Pegged Stablecoins, Reshaping Global Digital Payments

The recently proposed GENIUS Act in the United States establishes a clear regulatory framework for stablecoins, promoting the deep integration of dollar-denominated digital assets into the financial system. The act mandates that payment stablecoins must be fully backed by high-quality dollar assets, such as short-term Treasury bills, and imposes strict disclosure and review mechanisms on issuers. This legally establishes their legitimacy as payment instruments, rather than securities or legal tender.

Given that almost all mainstream stablecoins are currently pegged to the dollar, the act's implementation will further solidify the dollar's central role in global digital payments. Economist Barry Eichengreen points out that this trend does not weaken the dollar but rather strengthens its appeal as a global store of value through network effects, liquidity concentration, and regulatory certainty. In countries with weak financial infrastructure, privately issued dollar stablecoins are becoming a convenient channel for citizens to access dollar-denominated assets, effectively promoting "digital dollarization."

A Brookings Institution analysis suggests that the act clearly distinguishes payment stablecoins from securities while attracting users seeking stable value storage and efficient cross-border payments through compliance thresholds for issuers. The Columbia University Center on Global Economic Governance emphasizes that mandating dollar reserves and linking them to U.S. Treasury bonds not only increases issuers' dependence on the U.S. financial system but also continuously expands overseas demand for U.S. Treasury bonds. However, the act has also sparked controversy. Former Greek Finance Minister Yanis Varoufakis criticized it as a "Trojan horse for privatizing money," arguing that ceding currency issuance rights to private companies and granting them official endorsement could weaken central banks' monetary sovereignty. Senator Elizabeth Warren warned that the expansion of stablecoins could breed financial risks and regulatory loopholes if consumer protection and anti-money laundering mechanisms are not strengthened simultaneously. Overall, the GENIUS Act is not only a regulatory innovation but also a strategic move by the United States to extend its monetary influence through institutional design, quietly reshaping the dollar's digital frontier in the global financial landscape.