Today I want to talk to you about a very interesting topic - the "Warring States Period" of stablecoins. In 2025, the United States passed an important law called the GENIUS Act, which completely changed the rules of the stablecoin game and triggered an unprecedented "battle for digital dollars". Imagine that if the stablecoin market is compared to the ancient Warring States Period, then there are now four powerful "princes" fighting for the world. Each alliance has its own characteristics and strategies, just like four martial arts sects with different personalities. Let me introduce them to you one by one.
📜 The rules of the game have changed dramatically: What exactly has the GENIUS Act changed?
First, we need to understand the GENIUS Act, which is a game-changing act. The name sounds cool, and its full name is the "Guidelines and Establishments for the National Innovation of Stablecoins in the United States Act." You can think of it as the "constitution" of the stablecoin industry, which sets clear rules for this once somewhat "wild" field.
The most important provisions of this Act are:
Reserves must be fully backed 1:1 : Just as banks must have enough money to pay deposits, companies issuing stablecoins must back each stablecoin with the safest assets, such as U.S. dollar cash and short-term U.S. Treasury bonds.
The $10 billion "watershed" : If your stablecoin market value exceeds $10 billion, it must be subject to strict federal government regulation; if it is below this figure, you can choose to accept relatively loose regulation at the state level. This is like setting an "adulthood line" - small companies can grow under the care of their parents (state governments), while large companies must face stricter "social rules" alone.
No direct interest payments : The purpose of this regulation is clear - to prevent various stablecoin issuers from launching an "interest war" in order to snatch users, and promising higher yields to attract users. If this is allowed, stablecoins will change from "payment tools" to "speculation tools", completely deviating from their original intention as digital cash. At the same time, this is also done to appease the traditional banking industry and prevent stablecoins from directly snatching banks' deposit business .
"Threshold" of big tech companies : Tech giants like Amazon and Apple want to issue stablecoins? Not so easy! They must go through strict approval to prevent them from easily monopolizing the market by using their huge user base.
🏛️ The first force: Compliance Excellence Alliance (USDC)
Let’s first look at the first “school” - the alliance centered on USDC issued by Circle. If this alliance is compared to a person, it is the “three good students” in the class: excellent grades, liked by teachers, but sometimes a little “nerdy”.
Circle is like a particularly obedient student who strictly follows all regulations. Their reserves are almost entirely US Treasury bonds and cash, with extremely high transparency, and they publish detailed audit reports every month. This "model student" approach has won the favor of regulators and made institutional investors more willing to trust them.
However, there is actually a bit of " family conflict " within this alliance. The relationship between Circle (issuer) and Coinbase (main distributor) is a bit like the relationship between "manufacturer" and "distributor". The problem is that Coinbase, the "distributor", is too strong and takes most of the profits. Circle has an annual revenue of $1.68 billion, but its operating profit is only $167 million, and most of the money is taken by Coinbase in various forms.
Coinbase is so strong against Circle because the importance of Coinbase to USDC cannot be overemphasized. First of all, it is precisely because Coinbase has launched a large number of trading pairs including USDC that USDC has a real use case and market demand. More importantly, although Circle cannot directly pay interest to USDC holders according to the GENIUS Act, Coinbase can use its own money to issue "rewards" to users who use USDC on the platform - this is actually a disguised form of giving benefits to users. This ability is too important for winning users, and it is also the reason why Coinbase is so strong in negotiations.
What is even more troubling for Circle is that Coinbase has set many restrictive clauses in the contract. For example, if Circle wants to cooperate with other channels, it needs to get permission from Coinbase. More extreme is that if Circle cannot pay dividends to Coinbase in the future (for example, due to regulatory prohibition), Coinbase can even take over the issuance rights of USDC! This is like a "tyrannical clause", which makes Circle have to look at Coinbase's face in many decisions.
For Coinbase, the profits brought by USDC are not only huge, but also very stable - unlike transaction fees, which are greatly affected by market conditions. For this reason, Coinbase has always wanted to acquire Circle and completely control this "cash cow". However, after Circle's successful listing in 2025, its stock price rose sharply, making the acquisition plan more expensive, and Coinbase had to temporarily shelve this idea.
This is why Circle chose to go public - they need more funds and independence to get rid of over-reliance on Coinbase and establish their own sales channels. This game between "manufacturers" and "distributors" will determine the future direction of the USDC Alliance.
🌊 The Second Force: Offshore Empire (USDT)
The second "school" is the alliance centered on Tether's USDT. If the USDC alliance is a "three-good student", then the USDT alliance is like a "gang boss" - experienced, flexible, and has "little brothers" all over the world.
USDT is the largest stablecoin with a market value of nearly $150 billion, and its profitability is amazing, with annual profits in the billions of dollars. There are two main "secrets to making money":
The first secret is a high-yield investment strategy . In addition to investing in safe U.S. Treasuries like other stablecoins, they also invest in some riskier but higher-yielding assets, such as corporate bonds, secured loans, precious metals, and even Bitcoin. It is estimated that about 18% of the reserves are invested in these high-risk, high-yield assets. This is like an investment expert who is not satisfied with the meager interest on bank deposits, but seeks higher returns through diversified investments. Of course, this practice is not allowed under the strict requirements of the GENIUS Act.
The second secret is extremely low channel costs . Unlike USDC, USDT, with its first-mover advantage and market position, does not need to pay high listing fees or commissions to major exchanges. On the contrary, major exchanges are actively competing to list trading pairs including USDT because of huge user demand. This saves "distribution costs" of more than $1 billion like Circle, allowing Tether to retain more profits.
Facing the challenge of the new bill, Tether has adopted a very smart strategy: a dual-track system . They plan to keep the original USDT to continue serving the global market (especially emerging markets), while developing a fully compliant new stablecoin specifically for the US market. This is like a multinational company that adopts different business strategies in different countries.
Another important member of the USDT Alliance is the TRON network. More than 50% of USDT circulates on TRON, because TRON's transfer fees are low and the speed is fast, which is particularly suitable for cross-border remittances and transactions. This relationship is mutually beneficial: USDT gains efficient infrastructure, and TRON gains huge transaction volume and revenue.
What is more noteworthy is that Tether also has a strong political background . They cooperated with Wall Street giant Cantor Fitzgerald, whose CEO Howard Lutnick is the Secretary of Commerce in the current Trump administration. Lutnick once publicly endorsed Tether, claiming that "Tether keeps its word." This political relationship provides Tether with a strong "umbrella" - with such a strong political background, there is no need to worry about compliance issues .
Even more cleverly, the GENIUS Act allows for reciprocal relationships with foreign jurisdictions whose regulatory regimes are "substantially similar." Tether has already obtained a license in El Salvador, and with its strong political capital, it is entirely possible to lobby the U.S. government to identify El Salvador's regulatory regime as "substantially similar," thereby opening a backdoor for USDT to reenter the U.S. market . This is like getting a "get out of jail free card" that allows you to bypass some of the strict domestic regulatory restrictions.
👑 The Third Force: Political Elite Group (USD1)
The third "school" is the newest and most controversial one - the alliance centered on the USD1 stablecoin. If the first two alliances were founded on technical strength and market accumulation, then this alliance is a typical "politics + capital" alliance, which has the flavor of an ancient "royal marriage".
The alliance's lineup is star-studded:
Political star : World Liberty Financial projects, including USD1, are closely related to the Trump family. Opening the official website of World Liberty Financial, the title of the tab page reads "Inspired by Trump, Powered by USD1", which shows the political influence that Trump has provided to USD1.
Distribution giant : As the world's largest cryptocurrency exchange, Binance provides a strong distribution network for USD1. Interestingly, although Binance is also a distribution channel for USDC, considering the Coinbase background behind USDC, Binance is obviously unwilling to make wedding clothes for "competitors". Binance's own stablecoin project has not developed well, so choosing USD1, a project with a deep political background, can not only meet its own needs, but also gain an advantage in the competition with Coinbase.
Sovereign capital : In March 2025, MGX, a state-owned investment institution in Abu Dhabi, UAE, announced that it would invest $2 billion in Binance and use USD1 to settle the investment. This move can be called a "masterstroke" - Binance cleverly used these USD1 from MGX to create USD1 trading pairs on the platform, thereby building a complete channel for distributing USD1 to ordinary users. You know, it is usually extremely difficult and expensive to list a coin on a top exchange like Binance, but USD1 easily solved all the problems through this sovereign investment, truly achieving "killing two birds with one stone".
Infrastructure : Justin Sun plays a key role in this alliance, both as an investor and an advisor, and USD1 chose to be issued on his TRON network. For Justin Sun, this is more like a smart "political investment" - he uses his own TRON network to provide infrastructure support for USD1, and the Trump family "returns the favor" by helping him resolve the legal dispute with the SEC. This mutually beneficial arrangement reflects the delicate balance of political and business relations.
This "top-down" market development strategy is completely different from the development path of traditional cryptocurrencies. The traditional model usually starts with technological innovation, then attracts users, and finally forms a network effect. However, the USD1 Alliance directly creates huge application scenarios and market demand through political influence and sovereign-level large-scale transactions. This approach can be said to be a "dimensionality reduction attack" on the traditional competition model.
However, USD1's political resource advantage is also a "double-edged sword". During Trump's current administration, the entire Trump family crypto industry, including USD1, is indeed prosperous. But the political wind is unpredictable. Once Trump leaves office and the Democratic Party returns to power, USD1 is likely to face the risk of political liquidation. Therefore, USD1's political resources are both its biggest competitive advantage today and may also become its biggest uncertainty factor in the future. This business model that is highly dependent on political relations is destined to make the USD1 alliance experience greater ups and downs in the tide of political changes.
🏦 The Fourth Force: Traditional Banks’ Counterattack
The biggest threat to crypto stablecoins may not come from each other, but from the traditional financial system they are trying to subvert. While the native players in the crypto world are fighting fiercely, the "behemoths" in the traditional world have quietly entered the market.
JPMD launched by JPMorgan Chase is very interesting: it looks like a stablecoin, acts like a stablecoin, but legally it is not a stablecoin, but a tokenized form of bank deposits. This distinction is very important, and it brings several "killer" features:
It can legally pay interest! Because it is essentially a deposit. This is what the GENIUS Act prohibits stablecoins from doing.
It is directly backed by the bank and has a very high credit rating.
It operates under a mature banking regulatory framework and does not need to adapt to new and untested stablecoin regulations.
You may ask, isn't it invincible? Don't worry, it has a huge limitation: it is a "private club". Only large institutions that have been strictly approved by JPMorgan Chase can join this network, and ordinary people can't use it at all. Its battlefield is institutional settlement, not our daily payment.
In addition to JPMorgan Chase, other large banks such as Bank of America are also exploring the issuance of their own deposit tokens and even considering forming a banking alliance to create a shared, interoperable, bank-led digital currency. This is actually a coordinated defensive action taken by the banking industry to prevent being "disintermediated" by crypto-native stablecoins. Their strategy is smart: borrowing new technologies (blockchain) while retaining their core advantages, such as credibility, clear supervision, and seamless connection with the existing financial system.
This trend indicates that the future of the digital dollar may be divided. The market will not move towards a single type of digital dollar, but will split into two categories serving different markets: stablecoins dominate the crypto-native and retail markets, and deposit tokens dominate the institutional and B2B markets.
💼 Challengers outside the city gate: Diversification strategies of technology giants
As the major alliances vie for territory, some technology and fintech companies are also looking for their own opportunities, but their strategies vary.
Stripe: The wisdom of selling shovels . Stripe has chosen a very smart path: not directly participating in the competition for stablecoin issuance, but providing infrastructure services for everyone. This is like not digging for gold in the gold rush, but selling shovels to gold diggers. By acquiring Bridge and Privy, Stripe has gained the ability of "stablecoin as a service", allowing any developer to easily issue their own stablecoin. The benefit of this strategy is that no matter who wins the stablecoin war in the end, Stripe will benefit from it.
PayPal: Attract users with rewards . Although PayPal's PYUSD has a market value of only $900 million, they offer an annualized rate of return of up to 3.7% to attract users. This seems to violate the GENIUS Act's prohibition on stablecoins paying interest, but PayPal cleverly packaged it as a "loyalty reward" with funds coming from the company's own treasury, not the interest on stablecoin reserves. This is the same as a credit card company saying "Thank you for using my card, I'll give you 1% cash back from my income" in legal nature. This is a commercial promotion behavior.
Walmart and Amazon: Stumbling over the law . For retail giants like Walmart and Amazon, the motivation for issuing stablecoins is clear: to reduce billions of dollars in credit card fees each year and build their own payment ecosystem. However, the main obstacle they face is the strict restrictions on the issuance of stablecoins by non-financial companies under the GENIUS Act. This is a major legislative setback for large technology and retail companies, forcing them to seek cooperation with other stablecoin issuers.
Meta: A cautious return . After the disastrous failure of the Libra project, Meta has become very cautious and made it clear that the new strategy focuses on "actual payment scenarios" rather than "reshaping the monetary system", such as focusing on providing cross-border payment services for Instagram creators. Due to the high attention of Congress (senators have sent letters to inquire), Meta is likely to choose to cooperate with existing stablecoin issuers, making payment scenarios on social platforms such as Instagram a key battlefield for major stablecoins to compete for.
🔮 Future Outlook: The Ending of the Four-Nation Tournament
After reading the introduction of these four "schools", you may ask: Who will be the final winner? In fact, there may not be a single winner in this war. The more likely scenario is market differentiation:
Institutional Market : Deposit tokens from banking alliances are likely to dominate as they pay interest, have clear regulation, and are more in line with institutional needs.
US Retail Market : USDC Alliance is likely to continue to lead due to its compliance and deep integration with the largest US exchanges.
Global Emerging Markets : USDT Alliance is likely to continue to reign supreme with its first-mover advantage and deep roots in emerging markets.
Politically driven special scenarios : USD1 alliances may play a unique role in some specific political and sovereignty transactions (such as bulk energy).
💭 Last words
This stablecoin war reflects not only the competition of technology and business models, but also the competition of different financial concepts and governance models. Traditional finance emphasizes security and regulation, crypto-native projects pursue innovation and decentralization, and political capital attempts to redefine the rules through power and relationships.
For ordinary users like us, this kind of competition is actually a good thing. It promotes technological innovation, improves service quality, and gives us more choices. No matter who wins in the end, the era of digital dollars has arrived, and we are all witnesses and participants of this historical process.
How will the future develop? Let us wait and see this wonderful "Four Kingdoms"!
