GENIUS Act Challenges U.S. Dollar Control Through Stablecoins

The recent passage of the GENIUS Act has sparked widespread debate, with many misconceptions circulating about its implications for financial regulation and digital assets. The bill, according to opinion writer Zachary Kelman, does not eliminate government control over money, make Bitcoin tax-free, or fully legalize decentralized finance (DeFi). Nor is it a covert strategy to push a central bank digital currency (CBDC) [1]. What the legislation actually does, he argues, is challenge the long-standing control of a few large banks and regulators over global dollar clearing [1].

This shift, Kelman emphasizes, is a significant break from a system increasingly leaning toward financial authoritarianism. By leveraging the growing influence of stablecoins, the GENIUS Act introduces a more decentralized approach to dollar access and usage, making it harder for regulators to impose politically driven mandates on how money is spent [1]. This move is seen as a step toward broader monetary freedom, even if imperfect, and a way to maintain the dollar's role as a global reserve currency amid rising competition from other nations [1].

The evolution of U.S. financial policy has long been marked by surveillance and control, starting with the Bank Secrecy Act of 1973 and expanding with the USA PATRIOT Act. These measures gave banks a broad mandate to monitor, record, and enforce compliance with financial regulations, often extending into politically sensitive areas. During the Obama administration, the Department of Justice's Operation Chokepoint pressured banks to cut ties with certain businesses, including those deemed politically undesirable [1].

The crypto industry found itself in the crosshairs of similar regulatory efforts, with critics like Larry Fink and officials such as Elizabeth Warren and Gary Gensler attempting to curtail its growth. However, increased lobbying by crypto firms, legal challenges against the SEC, and the approval of a Bitcoin ETF helped to mitigate these pressures. Meanwhile, the rise of stablecoins offered a new vehicle for dollarization, even as global efforts to de-dollarize gained momentum [1].

The turning point came with the U.S.-led sanctions against Russia following its invasion of Ukraine in 2022. The episode exposed the limitations of dollar-based financial power and undermined the rationale for maintaining a monopoly over dollar clearing. The GENIUS Act, in this context, is seen as a direct challenge to American financial imperialism, redirecting authority from traditional correspondent banks to stablecoins and other digital mechanisms [1].

Senator Kirstin Gillibrand's vocal opposition to an amendment requiring stablecoin issuers to monitor onchain transactions highlights the tension between surveillance and financial innovation. While some saw this as a moral victory for financial freedom, others argue it was a pragmatic response to the limits of U.S. financial dominance. Either way, the legislation marks a shift in how the dollar is used globally, with more individuals and institutions gaining access to both stablecoins and traditional crypto assets [1].

For now, the GENIUS Act represents a tangible step toward a more open and accessible financial system, though its long-term impact will depend on future political developments and the evolving role of figures like Larry Fink, who now hold significant influence over the digital financial landscape [1].

Source: [1] You’re wrong about the GENIUS Act (https://cointelegraph.com/news/wrong-genius-act?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound)