On July 17, the US “Guiding and Establishing a US Stable Coin National Innovation Act” (hereinafter referred to as the “GENIUS Act”) was passed by high votes in both houses of Congress; on July 18, President Trump signed the bill. As expected, the issuance, payment settlement, transaction, infrastructure structure, etc. of stablecoins will likely go on the fast lane in the future. This expansion cannot have a significant impact on global monetary policy, exchange rate market, etc.
The topics currently being discussed in China are still at the level of stablecoins not being “stable”; stablecoins are not the level of the US dollar’s “heart-saving pill”.
However, the ECB clearly felt the threat, and they had proposed that the dollar stablecoin could impact the control of the euro’s monetary policy. On July 28, Jurgen Schaff, an adviser to the European Central Bank’s market infrastructure and payments department, pointed out that if the dollar stablecoin is widely used in the euro area, the ECB’s control over monetary policy may be weakened.
The main reason is that the US dollar stablecoins account for too high a share in the global market and occupy an absolute dominant position, accounting for about 99% of the total market value of stablecoins. By contrast, the euro stablecoin is still on the edge with a market value of less than 350 million euros.
The euro is the world’s second largest international reserve currency. According to a report released by the European Central Bank on June 11 this year, the euro will account for about 19% of various indicators of the international currency market in 2024, of which foreign exchange reserves account for 20%, outstanding foreign currency bonds 26%, international credit 20%, and deposit accounts 15%, and overall maintaining its position as the world’s second largest currency. In terms of stablecoins, the euro is obviously lagging behind.
Even the euro, the world’s second largest reserve currency, is worried that its monetary policy effect will be weakened, so other non-US currencies will be self-evident.
In fact, the GENIUS bill signed by Trump may come into effect within weeks, and some authoritative estimates believe that the supply of stablecoin will be conservatively estimated to increase from $230 billion in 2025 to $2 trillion by the end of 2028. This trend, coupled with the US political support for stablecoins, will further tilt the balance in a favorable direction to the United States, thereby increasing the financing costs of the eurozone.
Another point is that Europe is unlike the United States, whose financial system is mainly dominated by commercial banks, while the United States is dominated by capital markets. The current development of stablecoins is increasingly deviating from the banking track, and commercial banks may be marginalized.
Major U.S. card organizations such as Visa and Mastercard have begun integrating stablecoins into their global products, while retailers such as Walmart and Amazon are also exploring the use of stablecoins, which could lead to a large number of transactions bypassing traditional banking systems. Currently, high-interest stablecoin loans have begun to prevail within the stablecoin currency circle, and some platforms have also begun to pay interest on stablecoin deposits, which has caused challenges to traditional currencies.
The main problem is that when users seek security or profit advantages that the euro denomination tool does not provide, they use the dollar stablecoin. Given the “network effect” and economies of scale of stablecoins, this trend will be difficult to reverse.
In fact, some people in China have long raised their concerns about the rapid expansion of stablecoins.
On June 18 this year, at the 2025 Lujiazui Forum, former central bank governor Zhou Xiaochuan said that the dollar stablecoin is more likely to have a global impact due to the strong support of the US dollar system behind it. According to the current concept of US dollar stablecoins, its main role may be reflected in two aspects: one is to improve the efficiency of transactions and remittances, and the other is to actively purchase other assets (including digital assets and crypto assets). However, such design may also bring about a problem that needs to be wary of, that it may further promote the dollarization phenomenon. It can be seen that in Central America and some countries with economic transformation, the phenomenon of dollarization to varying degrees has existed. Because the impact of dollarization on the economy is controversial. Unless it is absolutely necessary for high inflation and high debt, dollarization may have many side effects.
Li Yang, former vice president of the Chinese Academy of Social Sciences and director of the Institute of Finance, recently published an article pointing out that the legislative explanation of the US GENIUS Act clearly states that there are three goals to promote the development of stablecoins: one is to promote the modernization of the US payment and financial system; the second is to consolidate and strengthen the international status of the US dollar; and the third is to create new demand for trillions of dollars for US Treasury bonds.
From the current perspective, the issuance and expansion of stablecoins will inevitably maintain and strengthen the international status of the US dollar. Stablecoins have improved payment and settlement efficiency, reduced intermediate links, reduced costs, and allowed the US dollar to penetrate various trading scenarios. The stablecoin mechanism provides a good source of funds for the issuance of US bonds, which forms a cycle of stablecoins-US dollar-US bonds. This design allows the expansion of the crypto market not only to weaken the status of the US dollar, but instead extends the privilege of seigniorship to the world of blockchain, which allows the dollar hegemony to complete an adaptive evolution in the field of digitalization.
