In the halls of Washington stablecoins are no longer a fringe curiosity — they are fast becoming a cornerstone of US financial strategy. With the Stablecoin Transparency & Accountability for a Better Ledger Economy (Stable) Act and Guiding & Establishing National Innovation for US Stablecoins (Genius) Act making their way through Congress, the US is positioning itself to digitise the dollar and extend its monetary reach deep into the global crypto economy.
But this isn’t just about regulatory clarity or consumer protection. It’s about power and who holds it in the next phase of the digital economy.
The modern Eurodollar
To understand the gravity of what’s unfolding, think back to the rise of eurodollars — dollar deposits held outside US banks. They quietly reshaped global finance in the 20th century. Now, dollar-pegged stablecoins such as USDT and USDC are doing the same in the digital realm, circulating globally without ever touching a bank.
This evolution is profound. These so-called “cryptodollars” are enabling access to the dollar in markets far beyond the US Federal Reserve’s reach — whether in African peer-to-peer trades, decentralised finance (DeFi) lending pools or global crypto exchanges.
Legislating digital hegemony
Now Congress wants to formalise this new financial architecture.
The Stable and Genius acts aim to regulate stablecoin issuers by requiring them to hold 1:1 reserves in ultrasafe assets — think cash, short-term Treasuries and Fed deposits. That’s not just about protecting consumers, it’s about turning stablecoin issuers into indirect buyers of US government debt.
Stablecoin issuers hold more than $166bn in Treasuries. By 2028 that figure could hit $2-trillion, according to projections from Standard Chartered. That’s serious buying power and a convenient solution for a government staring down record deficits.
Stablecoins are in effect becoming a new pipeline for exporting the dollar and recycling US debt — without requiring banks, embassies or military bases.
Risks beneath the surface
Yet this pipeline isn’t without pressure. While regulation might bring stability, it also deepens the ties between crypto and traditional finance. Ratings agency Moody’s has warned that sudden confidence shocks — say, a major stablecoin depegging — could lead to Treasury liquidations, potentially rattling global bond markets.
And there’s a creeping sense that institutional actors are quietly taking the reins. Large banks and firms such as BlackRock and Fidelity are now shaping the stablecoin landscape, often with privileged access and behind-the-scenes influence.
The Stable act even prohibits paying interest on stablecoins, shielding banks from deposit competition while still allowing them to issue tokenised dollars. It’s regulation with a bias, and a power play.
Bitcoin, custody and the bigger game
Some critics see a larger trap forming. By encouraging users to lend or leverage their crypto through regulated platforms, the system draws more assets into centralised control — in the custody of firms tethered to the institutions bitcoin was meant to resist.
From loans and exchange traded funds to custodial wallets, every layer adds exposure to policy shifts, market fragility and even engineered liquidation events. The deeper crypto integrates with legacy finance the more it risks being absorbed, diluted or controlled.
Stablecoin regulation is coming and it will reshape everything from DeFi to Treasury markets. For US policymakers it’s a strategic master stroke: digitise the dollar, lock in global demand and use the private sector to absorb public debt.
For crypto users it’s more complicated. Convenience comes at a cost. The question isn’t just who regulates stablecoins — it’s who ultimately controls the flow of money in the digital world.
The new dollar pipeline is being built. But whether it empowers users or institutions depends on who holds the keys.
• Muchena is founder of Proudly Associated and author of ‘Artificial Intelligence Applied’ and ‘Tokenized Trillions’.
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