US Promotes Dollar Stablecoins to Global Market
The US will promote legal dollar stablecoins as official policy, aiming to consolidate the dollar's sovereignty in global payments rather than issuing a central bank digital currency.
An executive order dated January 23, 2025, explicitly requires "promoting the development and growth of legal dollar stablecoins globally," while revoking the 2022 executive order on digital assets and the Treasury's framework for external engagement, and prohibiting US institutions from promoting central bank digital currencies domestically and abroad. The genius act signed on July 18, 2025, categorizes payment stablecoins as federal categories, requiring 1:1 reserves, with assets limited to cash, custodial deposits, short-term government bonds, government bond repurchase agreements, and qualified money market funds, prohibiting rehypothecation, and requiring independent audits for monthly disclosures.
The Treasury will solicit opinions on Article 3 of the act in August 2026, proposing that from January 18, 2027, issuing payment stablecoins in the US generally requires a federal or state license; issuers selling offshore stablecoins to Americans must have the technical capability to execute US legal orders and equivalent arrangements. The Securities and Exchange Commission and the Commodity Futures Trading Commission jointly clarified in March 2026 that payment stablecoins compliant with genius are not considered securities.
About 98% of global stablecoins are pegged to the dollar, with a circulation scale of approximately $270 billion to $310 billion. Tether and Circle held nearly $150 billion in short-term government bonds as of the end of 2025, with a net purchase of about $33 billion that year. Treasury Secretary Scott Bessent publicly stated that stablecoins will be used to maintain the dollar's status as a reserve currency and create demand for government bonds. Federal Reserve officials also indicated that the incremental demand for dollar assets overseas would lower government financing costs.
In September 2026, 21 large banks and asset management institutions announced a joint venture, planning to establish a company in the second half of 2026 and launch a dollar stablecoin in the first half of 2027, with euro stablecoins as the next priority. Visa, Stripe, and others have already laid out distribution channels. On the overseas side, multiple countries are concerned that residents switching to dollar tokens will weaken their monetary policy and are accelerating the framework for central bank digital currencies and local currency stablecoins.
In terms of market mechanisms, buyers are depositors in high-inflation, weak banking economies, cross-border traders, and on-chain traders, while sellers are licensed issuers and the government bonds, deposits, and repurchase markets behind them. The event-driven factors come from the implementation of legislation and the countdown for licenses, with funds flowing from global users to short-term US government bonds and US custodial deposits. Beneficiaries include US Treasury financing, compliant issuers, and the dollar network; pressured parties include local currency payment sovereignty and the potential forced sale of government bonds in a redemption wave affecting reserve structures.
Members of the Bank of England's policy committee noted that stablecoins extend dollar settlements to markets that traditional banks cannot reach, while also transmitting pressure from the government bond market back to issuers.
Source: Public Information
ABAB AI Insight
The US has previously kept stablecoins in a gray area, with a cautious and internationally coordinated framework in 2022. This shift aims to establish private dollar tokens as an exportable monetary infrastructure: first setting the direction with an executive order, then locking reserves into short-term US government bonds with genius, and finally blocking offshore issuers at the US retail door with 2027 licenses. The path mirrors the structure used to maintain the dollar network after the 1971 abandonment of the gold standard, transitioning from the Society for Worldwide Interbank Financial Telecommunication to on-chain tokens.
Capital movement is very specific: for every dollar stablecoin issued, an additional dollar in cash or short-term debt must be allocated. Tether and Circle are already institutional buyers of short-term government bonds, and the joint venture of 21 banks aims to reclaim deposits and clearing rights from the token layer. The strategic motives are dual: externally, to use low-friction dollars to counter the digital yuan and the fragmented regulatory framework for crypto assets in the European market; internally, to provide a non-traditional buyer pool for the continuously expanding federal debt.
Analogies include the oil dollar cycle and the Eurozone's long-term dependence on dollar payments, with recent examples being the European market's crypto asset regulation confining euro stablecoins within compliance fences and China's promotion of cross-border trials for the digital yuan. The industry phase has shifted from speculative trading tools on exchanges to a competition for inter-state payment standards, with the US in a control period of exporting standards through legislation and binding government bonds with reserve rules.
Structural changes represent a transfer of pricing power. Once the unit of account for cross-border settlements shifts from bank accounts to redeemable on-chain dollar tokens, the clearing will ultimately still rest on US short-term debt and custodial deposits, shifting the price of monetary sovereignty from foreign central bank balance sheets to the US Treasury and licensed issuers. The mechanism occurs because the cost of using digital dollars is lower than opening offshore accounts, while genius defines "legal" as requiring the purchase of US safe assets, with growth itself creating demand for government bonds.
ABAB News · Cognitive Laws
Reserve currency relies on being used, not just being declared
Once private tokens lock in government bonds, the Treasury gains an additional printing press
The payment track has changed, but the minting power will not automatically change hands