Washington’s Genius Act has crypto advocates celebrating clear Stablecoin regulation. Politicians have touted it as a cement of dollar dominance for decades. The financial press has framped it as America’s masterstroke against competing money.
They are all losing the point. The Genius Act does not create a protective moat around the dollar. It has provided every country a plan for building their own digital currencies.
Regulatory clarity cuts the same way
The Genius Act deserves credit for bringing more clarity to US Stablecoin operations. Clear reserve requirements, regulatory administration, and compliance frameworks have removed most of the uncertainty that the sector has occurred for years. The USDC of the Circle and other major operators can finally build without continuing to look at their shoulders for regulatory changes.
But as Washington celebrates the supposed success for the dominance of the dollar, the true story is different. The Genius Act establishes a regulation template that other countries fit for their own currencies. Japan’s JPYC initiative, Hong Kong’s digital currency framework, and emerging programs throughout Latin America and Asia all borrowed so much from the American approach.
The framework is a standard in USD Stablecoins without addressing the basic futility that limits their global adoption: local liquidity gaps. Cross-border payments today still rely on expensive, many step-by-step money conversions that eat 3-6% on foreign exchange costs.
The problem with the dollar
Consider a Brazil worker in Japan who tries to send money home. Under the system today, they should navigate a complex yen converting route to dollar, buying USD stablecoins, and then converting to Brazil’s reals. Each step takes fees, delays, and risk of counterparts.
This process makes a little economic meaning. Why are the two non -dollar economics being forced by a USD mediator?
USD stablecoins such as the USDC work well as bridge assets for institutional and defi applications. But for daily cross-border payment between non-dollar economy, they introduced unnecessary complexity and cost, whereas neutral settlement layers enable cross-border liquidity without USD intermediation.
The accidental revolution
The global influence of the Genius Act creates the consequences of architects who are probably unexpected. By providing a clear framework of regulation, it reduces the detected risk of Sovereign Stablecoin projects worldwide. No countries need to wonder if digital currency regulation is possible – they can use American’s proven approach.
Japan’s digital agency has announced plans for yen-back stablecoins using compliance with frameworks inspired by US law. Hong Kong financial authority develops similar criteria for the Digital Digital Dollar. Brazil, Mexico, and other emerging economies are making their own versions.
Programmable foreign exchange between sovereign stablecoins can reduce cross-border costs below 0.1% while eliminating settlement delays. The vision resembles the CLS bank’s multilateral settlement system, but there is no USD hegemony. Foreign exchange with no dollar gatekeepers.
Regulation unity means no monopoly
The Genius Act has succeeded as a specific policy because other constituents can replicate its approach. Unity of regulation in major economies reduces the complexity of compliance for global Stablecoin operators while activating the integration of the seamless cross-border.
But both unity prevents any single currency from monopolizing digital payments. When each major economy offers the following local stablecoins, market forces will determine the patterns of adoption rather than regulatory barriers.
The USDC benefits of the Circle from the advantages of first-mover and deep integration of DeFI, making it a great bridge asset for institutional applications. However, consumer payments are likely to be grateful towards local stablecoins that remove friction of the foreign exchange and provide a familiar denomination.
European regulations under Mica create similar frameworks for euro-denominated stablecoins. Asian financial centers form similar structures for yen, won, and other regional currencies. Latin American countries explore alternative pesos and real-backed.
The result resembles traditional banking banking networks more than dollar hegemony. Each currency maintains a local utility while obtaining potential skills for international regulating.
Network effects work the same way
Stablecoin adoption follows the network effects similar to other digital platforms. Early users are raising towards established options with deep liquidity and extensive reception. This is initially favored by USD Stablecoins because of their head start and existing Defi integration.
However, network effects will reward the local utility. A Mexico business that pays pesos suppliers has little reason to handle the dollar stablecoins denomination beyond the settlement of the transaction. Local stablecoins eliminate money risk while providing the same benefits to be programmed money.
The most powerful impact of the network has emerged around specific use cases rather than abstract properties of store-of-value. Payroll systems, supplier payments, and consumer remittances all benefit from the matching denomination that removes exposure to foreign exchange.
Multi-currency Stablecoin infrastructure resembles email protocols beyond traditional financial systems. Just as Gmail users can talk to Outlook users through standard protocols, PESO stablecoins can cope with yen stablecoins through interoperable intelligent contracts.
The plural future of money
The Genius Act represents an important step toward the age of digital currency, but not the factors claimed by its supporters. Instead of cementing the dominance of the dollar, it proved the concept of sovereign digital currency for every major economy.
The future financial system is likely to feature twelve -the following stablecoins that represent basic currencies, all interconnected by the programmed layers of regulating. Dollar stablecoins will play essential roles in this ecosystem without having to dominate it.
For the rules, the lesson is clear. The clarity of the regulation accelerates the change as protective barriers are obsolete.
The Genius Act has not been crowned the dollar as king of digital currency. This has proven that the future belongs to anyone who builds the best infrastructure for local moneydether money. That’s a competition that can win America, but simply by competing with merit instead of relying on incumbent benefits.
The Stablecoin revolution is just beginning, and it will be glorious.
