Under the dome of Capitol Hill in Washington, when Trump's pen stroked the last line of the GENIUS Act, at this moment, thousands of miles away in a Manhattan mansion, a hedge fund manager was using USDT to pay a Nigerian supplier for goods - the payment arrived in 0.1 seconds, with a handling fee of only $0.3. This tiny ripple on the chain is converging into a huge wave that is reshaping the global financial order.
01 Two Heroes Fighting for Supremacy: The Warring States Period of Stablecoins
-USDT (market share 61.2%): holds $120 billion in U.S. Treasury bonds, which is larger than Germany’s national reserves, making it the 19th largest holder of U.S. Treasury bonds in the world. Its focus has shifted to the P2P remittance market, with a penetration rate of 43% in emerging countries.
-USDC (market share 24.4%): Riding on the trend of compliance, the market value doubled to US$61 billion, reserve assets are 100% cash and short-term treasury bonds, holding top licenses such as FinCEN and EMI, and promoting IPO in 2025 to become the "first stablecoin stock"
Decentralized forces are rising in the cracks. With its Delta-neutral hedging strategy, the market value of Ethena Labs' USDe has soared 42 times from $146 million to $6.2 billion, becoming the third largest stablecoin in the market; the market value of USDS launched by MakerDAO after it was renamed Sky has exceeded $2.6 billion, seizing the DeFi high ground through compliance transformation.
02 Bill Revolution: How GENIUS Recasts Dollar Hegemony
The GENIUS Act, passed on May 20, 2025, marks the official upgrade of stablecoins from a "regulatory gray area" to a strategic tool for the digitalization of the US dollar:
- Reserve shackles: mandatory requirement of 100% US dollar asset reserves (only cash, short-term debt within 93 days, money market funds), cutting off the survival of algorithmic stablecoins
- Interest isolation: prohibiting the issuer from paying interest, user funds from bankruptcy isolation, and ending Tether's arbitrage model of using reserve funds to invest in Bitcoin
-Geofirewall: Foreign stablecoins must be registered and regulated in the United States, and technology giants are not allowed to issue them without permission, which specifically suppresses the cross-border expansion of China's digital RMB
Behind the bill is a naked calculation of US dollar hegemony. When institutions such as Tether allocate 90% of their reserves to short-term US debt, an invisible bond-buying force is objectively formed - the issuer of stablecoins may become one of the largest holders of US debt by 2030, providing blood transfusion for the US$36 trillion fiscal deficit. US Treasury Secretary Benson bluntly said: "We will use stablecoins to maintain the US dollar's status as the world's reserve currency."
03Yield War: The life and death game of high-interest stablecoins
When the GENIUS Act banned interest-bearing stablecoins, a battle for yield innovation broke out in the regulatory blind spot. Falcon Finance in Dubai, UAE, became a dark horse:
Its synthetic dollar protocol USDf supports minting with assets such as BTC and ETH, with an annualized return of up to 14.3%.
By integrating Chainlink oracles and the Pendle yield platform, a Delta-neutral hedge matrix is built to maintain stability in volatile markets
This model is essentially the art of regulatory arbitrage - using the UAE's loose policies to circumvent the US ban, and then achieving "non-interest-bearing high returns" through on-chain combination strategies. Currently, its TVL has exceeded US$160 million, attracting a large amount of institutional funds to flee the low-yield USDC.
04Political Gamble: Trump’s Stablecoin Ambitions
The Trump family has long been in the stablecoin industry. The USD1 (issued by World Liberty Financial) supported by the Trump family mysteriously rose before the bill was passed:
Launched in March 2025, the market value exceeded US$2 billion in May and ranked among the top seven in the world
Democratic Senator Warren directly denounced it as a "shadow channel for political donations" and suspected that it was used to circumvent traditional bank supervision to transfer funds to specific camps.
The more sophisticated design is at the policy level. The Bitcoin Strategic Reserve Act includes 200,000 BTC seized by the judiciary into the permanent ban on sales reserves, forming a dual-track system of "sovereign assets + private stablecoins" with the GENIUS Act. This not only avoids financial disputes over direct purchases of coins, but also pushes up the coin price by freezing 6% of the circulation, providing value support for the US dollar stablecoin.
Geopolitical risks are hanging like the sword of Damocles. The truth behind Tether's holding of $120 billion in US debt is that it has tied the stable cornerstone of the crypto world to the US debt powder keg - if the credit of US debt collapses, USDT will become the first domino. When the Hong Kong Stablecoin Ordinance allows for some commercial paper reserves, the Eastern bloc is building a differentiated regulatory framework, and this currency war has just begun.
When Mexican farmers use USDT to buy seeds and when Filipino programmers receive their salaries in USDC, they will not realize that they have become the capillaries of the US dollar 2.0 system. The GENIUS Act is not the end point, but the starting gun for the race to digitize sovereign currencies.
