The United States will rewrite financial regulations! Analysis of the "GENIUS Act": The impact of stablecoins goes far beyond your imagination.

"This is an extremely clever asymmetric strategy. The United States is using its opponent's weakest link: the fear of loss of control, to build its own moat," as Trump happily signed his name on the documents of the "GENIUS Act," this is not just a technical adjustment of financial regulation, but its deeper meaning is to grant a charter for the "New East India Company" of the 21st century. A transformation that reshapes the global power structure has already begun, and the impact of stablecoins far exceeds your imagination.

1. The Ghost of History: The Digital Return of the East India Company

History does not simply repeat itself, but it rhymes. Looking back four hundred years, the Dutch East India Company (VOC) and the British East India Company (EIC), authorized by their governments, combined merchants, soldiers, diplomats, and colonizers to control global trade routes. Today, what the GENIUS Act does is grant legitimacy to the power brokers of a new era – stablecoin issuers – in legislative form.

On the surface, the bill aims to regulate the market and prevent risks by setting reserve standards and requiring asset certifications. However, its true effect is to create an oligopoly of "legal" stablecoin issuers recognized by the U.S. government through filtering and certification. These "crowned" companies, such as Circle (issuer of USDC), the future Tether (if it chooses to comply), and internet giants like Apple, Google, Meta, and X, which have hundreds of millions of users, will no longer be the wild-growing crypto insurgents but will be formally incorporated into the U.S. financial strategic layout as "chartered companies." What they will control is the new era's global trade routes—24/7 uninterrupted execution of borderless digital financial rails.

The power of the East India Company was rooted in its monopoly over physical trade routes, while the new era "digital East India Company" will exercise power by controlling the financial rails of global value flows. When a dollar stablecoin regulated by the U.S. Treasury or a specific agency becomes the default settlement unit for global cross-border payments, DeFi lending, and RWA transactions, its issuer holds the power to define the rules of the new financial system. This is a deeper, more intangible power than controlling physical trade routes.

2. Global Currency Tsunami: Dollarization, Great Deflation, and the End of Non-Dollar Central Banks

The "GENIUS Act" has given rise to not only a new power entity but also a monetary tsunami that will sweep across the globe. The energy of this tsunami originates from the collapse of the Bretton Woods system in 1971, paving the way for the global conquest of today's US dollar stablecoin.

For countries with inherently weak sovereign credit, the future will no longer be about whether the government chooses its own currency or the traditional dollar, but rather about the public choosing between a collapsing local currency and the easily accessible, frictionless digital dollar. This will trigger an unprecedented wave of super dollarization, completely ending the monetary sovereignty of many countries and bringing them devastating deflationary shocks.

Stablecoins have completely dismantled the barriers of traditional dollarization. Anyone with a smartphone can, within seconds and at a very low cost, exchange their soon-to-depreciate local currency for a stablecoin pegged to the US dollar. In Vietnam, the Middle East, Hong Kong, Japan, and South Korea, U stores are rapidly replacing traditional exchange shops, real estate offices in Dubai are starting to accept Bitcoin payments, and small shops in Yiwu are beginning to accept U for cigarette purchases. These pervasive payment infiltrations will transform the dollarization of stablecoins from a gradual process into an instantaneous tsunami.

When a country's inflation expectations rise slightly, capital will no longer be "flowing out," but rather "evaporating"—disappearing instantly from the local currency system and entering the global crypto network. For those governments whose credibility is already shaky, this will be a fatal blow. The status of the local currency will be completely shaken, as the public and businesses will have a more perfect and efficient alternative. When an economy is swept by the wave of super dollarization, its sovereign nation will lose two of its most core powers: first, the power to print money to cover fiscal deficits; second, the power to regulate the economy through interest rates and money supply. The consequences are disastrous, leading to a spiraling decline in the exchange rate of the local currency, plunging into hyperinflation, while at the same time, there will be severe deflation in economic activities priced in dollars.

III. The Financial Battlefield of the 21st Century: America's Confrontation with China's "Free Financial System"

If the stablecoin bill represents a restructuring of power internally, then externally, it is a crucial piece in the chess game of great power competition between the United States and China: through legislation, supporting a private, public blockchain-based "free financial system" centered around the dollar.

The strategic paths of China and the United States in digital currency exhibit fundamental differences, representing an ideological war of "openness" versus "closure." China's digital renminbi (e-CNY) is a typical "permissioned" system, executed on a private ledger controlled by the central bank, with every transaction and account under the strict surveillance of the state. In contrast, the stablecoins supported by the U.S. through the GENIUS Act are built on "permissionless" public blockchains like Ethereum and Solana. This means that anyone, regardless of their location, can innovate on this network without needing approval from any centralized authority. The role of the U.S. government is not to be an operator of this network, but to act as the "credit guarantor" of the most core asset within this network (the U.S. dollar).

This is an extremely clever asymmetric strategy. The United States is leveraging its opponent's weakest link—the fear of losing control—to build its own moat. It attracts global innovators, developers, and ordinary users seeking financial freedom into a dollar-centric open ecosystem. When a large portion of the world's digital value begins to operate on this new track, attempting to establish a "SWIFT alternative" is akin to trying to build a more luxurious carriageway in the era of highways, rendering it meaningless.

IV. The "Decentralization" of All Things: How RWA and DeFi Undermine State Control

Stablecoins themselves are not the endpoint of a revolution; they are more like a Trojan horse that has invaded the city. Once global users become accustomed to holding and transferring value through it, a much larger and deeper revolution will follow. At the core of this revolution is the transformation of all valuable assets—stocks, bonds, real estate, artworks—into digital tokens that can flow freely on a global public ledger. This process, known as "Real World Asset on Chain" (RWA), will fundamentally sever the connection between assets and specific national jurisdictions, achieving the "denationalization" of assets, and ultimately overthrowing the traditional financial system centered on banks.

The core function of stablecoins is to serve as a gateway connecting the traditional fiat currency world and the cryptocurrency world. They are the "on-ramps" of the crypto world and are the "bridges" that span the two worlds. An ordinary user may initially be drawn to stablecoins for the low cost and high efficiency they offer in cross-border remittances or daily payments. However, once they download a digital wallet and become accustomed to on-chain transaction models, the distance between them and truly decentralized assets like Bitcoin and Ethereum is only a click away.

The core of RWA is to transform assets existing in the physical world or traditional financial systems into tokens on the blockchain through legal and technical processes. This is not just a superior payment track; it is a parallel financial universe that almost disregards the political and legal boundaries defined by the Westphalian system. This is precisely what drives the "denationalization of currency," promotes the "denationalization of finance," and ultimately achieves the "denationalization of capital."

V. The Rise of Sovereign Individuals and the Twilight of the State

When capital can flow across borders, when assets can be freed from judicial jurisdiction, and when power shifts from nation-states to private giants and online communities, we arrive at the endpoint of this transformation—an era dominated by the "Sovereign Individual," marked by the end of the Westphalian system. This revolution, driven by stablecoins and artificial intelligence (AI), will have far-reaching implications that surpass the French Revolution, for it not only brings about a change of regimes but also transforms the very existence of power.

The book "Sovereign Individual" predicts that the arrival of the information age will fundamentally change the logic of violence and power. The emergence of stablecoins, DeFi, and RWA is the real-world version of "cybermoney" and "cybereconomy" described in this book. Together, they construct a global, low-friction value network that truly gives capital wings.

The cornerstone of the Westphalian system is the absolute control of the state over the population and property within its territory. The rise of sovereign individuals is fundamentally eroding this cornerstone. When the most creative and productive individuals conduct their economic activities and accumulate wealth in the "extraterritorial" (cyberspace), the boundaries of territory lose their meaning. States find themselves unable to effectively tax these globally mobile elites, and their financial base will inevitably be weakened.

The next step of this revolution will be privacy. Although current public blockchains are pseudonymous, transactions can still be tracked. However, with the maturation of privacy technologies such as zero-knowledge proofs, future financial transactions may achieve complete anonymity and untraceability. When a global, stablecoin-based financial system combines with powerful privacy technologies, it poses the ultimate challenge to national tax capabilities.

Conclusion:

The "GENIUS Act" is far from a simple domestic legislation. It is a core strategic deployment of the United States in the geopolitical chessboard of the 21st century. It uses the concept of "decentralization" and "openness" in a way that is akin to "using four ounces to move a thousand pounds" to consolidate its most fundamental power – the hegemony of the US dollar. It is not engaging in a symmetrical arms race with China, but rather changing the terrain of the financial battlefield, bringing competition into a new dimension where the United States has absolute advantage, and conducting a dimensional reduction strike on the opponent's financial system. We stand at the dawn of the disintegration of the old world and the emergence of a new order. This new world will grant individuals unprecedented freedom and power, but it will also bring chaos and challenges that we can hardly imagine today.