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