Is cryptocurrency regulation a regression of the ideal of decentralization, or an inevitable evolution of the financial system's standardization?

Written by: Buttercup Network, Thejaswini M A

Translated by: Saorise, Foresight News

Translator's note: Cryptocurrency, once seen as a "revolution to disrupt traditional finance," has ultimately not taken the path of violent confrontation. Instead, it has become deeply intertwined with regulatory systems and political consensus, evolving into a "tamed revolution." The absurdity and contradictions of this "revolution," from challenging tradition to seeking permission, from the ideal of decentralization to the reality of centralized regulation, are the core issues this article aims to analyze. When rebels bow to the system, is it a game of interests or an inevitability of the times?

In 2025, the rebels (cryptocurrency) did not challenge banks but instead applied for a license from the Office of the Comptroller of the Currency (OCC) in the United States.

I have been trying to understand the phenomenon of the "GENIUS Act." The more I ponder it, the more absurd it seems. So, allow me to outline how we transitioned from "acting fast and breaking norms" to "acting fast and complying with regulations."

The act has been signed and is now in effect, with all rules settled. Stablecoins are now regulated, no longer shrouded in mystery; we know who can issue them, who regulates them, and how they operate. But this raises an obvious question: What does all this mean?

If you ask people in the cryptocurrency field, they will passionately declare that this is the moment cryptocurrency goes mainstream, a regulatory revolution that changes everything. They will excitedly discuss "regulatory clarity," "institutional adoption," and "the future of currency," all while tightly clutching that 47-page act as if it were the Constitution.

If you ask officials from the U.S. Treasury, they will go on and on about how this can unprecedentedly strengthen the dollar's dominance, ensure security, and attract investment back to the U.S., reciting all the clichés that government officials often use.

On the surface, it seems both sides have won, but to be honest, the greater benefits flow to the regulators. Cryptocurrency and Bitcoin once aimed to undermine banks and end dollar hegemony, but now they hope banks will issue cryptocurrency backed by the dollar.

At the core of this whole matter lies an interesting contradiction: banks are actually quite fearful of stablecoins, which is entirely understandable. They watch as trillions of dollars could potentially flow out of traditional deposits and into those non-yielding, fully reserved digital tokens. Congress's response has been to make it illegal for stablecoin issuers to pay interest, essentially protecting banks and helping them avoid the fear of competition.

The law states:

"Any authorized issuer of stablecoins or foreign issuer of stablecoins shall not pay any form of interest or yield (whether in cash, tokens, or other forms of consideration) to holders solely for holding, using, or retaining stablecoins."

Cryptocurrency originally aimed to create a trustless, decentralized alternative to traditional finance. But now, while you can send stablecoins on-chain, you must operate through embedded plugins, using venture-backed applications, and settle with licensed issuers, whose partner banks are still JPMorgan. The future has arrived, yet it looks just like the past, only with a better user experience and more regulatory paperwork.

The "GENIUS Act" has constructed a complex, Rube Goldberg-like system where you can use revolutionary blockchain technology, but only if you:

• Obtain approval from the Office of the Comptroller of the Currency
• Hold U.S. Treasury securities at a 1:1 ratio as reserves
• Submit monthly proof signed by the CEO and CFO
• Allow authorities to order the freezing of tokens
• Commit to never paying interest
• Limit business activities to "issuing and redeeming stablecoins"

The last point is particularly thought-provoking: You can innovate finance, but you cannot use the innovated finance for anything else.

We are witnessing a movement that should be anti-establishment becoming institutionalized. Existing stablecoin issuers like Circle are thrilled because they are already largely compliant and can now watch their less regulated competitors get kicked out of the field.

Meanwhile, Tether faces a life-or-death decision: either become transparent and accountable or be banned from U.S. exchanges by 2028. For a company that started with opacity and offshore banking, this is akin to asking a vampire to work the day shift.

Of course, given Tether's size, it may not need to worry too much about this. With a market cap of $162 billion, larger than Goldman Sachs and exceeding the GDP of most countries, it is, frankly, even more significant than the entire regulatory framework trying to constrain it. When the size reaches this level, "comply or leave" sounds less like a threat and more like a suggestion.

The "Libra clause," which essentially prevents tech giants from issuing stablecoins at will, is named after Facebook's failed attempt to launch a global digital currency. Remember when everyone panicked that Facebook might undermine sovereign currencies? Under the current system, if Facebook wants to issue a stablecoin, it must obtain unanimous approval from the Federal Reserve, and the token cannot pay interest, needing to be fully backed by U.S. government debt.

Now, let's discuss the economic logic behind everyone's sudden interest in this matter. U.S. merchants currently pay 2%-3% in fees to Visa and Mastercard for each transaction, which is often the largest expense aside from wages. In contrast, the cost of stablecoin payments is only a few cents, with large settlements even below 0.1%, as blockchain infrastructure does not require large banks and card organizations to take a cut. The $187 billion in card fees each year could have stayed in merchants' pockets. This makes Amazon and Walmart's interest in stablecoin solutions understandable: why pay the duopoly of card organizations when you can send digital dollars directly?

@Visa

There is also a terrifying feedback loop that no one wants to discuss: If stablecoins really take off and reach trillions in issuance, a significant portion of the demand for U.S. Treasury bonds will come from stablecoin reserves.

This sounds good, but the problem is that the demand for stablecoins is inherently more unstable than traditional institutional buyers. Once people lose confidence in stablecoins and start redeeming en masse, all Treasury bonds will flood the market in an instant. At that point, the U.S. government's borrowing costs will depend on the mood of cryptocurrency Twitter users that day, akin to betting mortgage repayments on the emotional fluctuations of short-term traders. The U.S. Treasury market has weathered many storms, but "panicked stablecoin users triggering algorithmic sell pressure" would be a first.

Most intriguingly, this reflects the evolution of cryptocurrency from "anarchist currency" to "institutional asset class." Bitcoin was supposed to be peer-to-peer electronic cash that required no trusted third party, but now there is a federal law stating that digital dollars can only be issued by highly trusted, strictly regulated third parties, which must also be accountable to higher-level regulators.

The law requires stablecoin issuers to be able to freeze tokens on the blockchain when authorities demand it. This means that every "decentralized" stablecoin must have a centralized "emergency stop switch." This is not a flaw; it is a feature.

We have successfully created "censorship-resistant currency," but it simultaneously possesses the ability to enforce censorship.

Don't get me wrong; I fully support regulatory clarity and stablecoins backed by the dollar. This is indeed great: crypto innovation now has rules to follow, and the mainstreaming of digital dollars is a true revolution. I wholeheartedly agree. But let's not pretend this is some generous act of regulatory enlightenment. Regulators did not suddenly fall in love with crypto innovation; someone walked into the Treasury and said, "Why not let the world use more dollars, just in digital form, and make them buy more U.S. Treasuries to back it?" Thus, stablecoins transformed from "dangerous crypto toys" into "a brilliant tool of dollar hegemony."

Every USDC issued means selling one more Treasury bond. With $242 billion in stablecoins, that means hundreds of billions of dollars flowing directly into Washington, boosting global demand for U.S. Treasuries. Every cross-border payment avoids euros or yen, and every regulated U.S. stablecoin listed in the foreign exchange market is another "franchise" of the U.S. monetary empire.

The "GENIUS Act" is the most ingenious diplomatic maneuver, disguised as domestic financial regulation.

This raises some interesting questions: What happens when the entire cryptocurrency ecosystem becomes an appendage of U.S. monetary policy? Are we building a more decentralized financial system, or creating the world's most complex dollar distribution network? If 99% of stablecoins are pegged to the dollar, and any meaningful innovation requires approval from the OCC, have we inadvertently turned revolutionary technology into the ultimate export business for fiat currency? If the rebellious energy of cryptocurrency is directed towards enhancing the efficiency of the existing monetary system rather than replacing it, as long as payment settlements are faster and everyone can profit, will anyone really care? These may not be questions, but they are far removed from the issues people wanted to address when this movement began.

I have been joking about this, but the truth is, it might actually work. Just as the free banking system of the 1830s evolved into the Federal Reserve System, cryptocurrency may be maturing from its chaotic adolescence into a part of the financial infrastructure with systemic importance.

To be honest, for 99.9% of people, they just want to transfer money quickly and cheaply, without caring about monetary theory or decentralization ideals.

Banks are already positioning themselves to become the primary issuers of these newly regulated stablecoins. JPMorgan, Bank of America, and Citigroup are reportedly preparing to offer stablecoin services to their clients. Those institutions that were supposed to be disrupted by cryptocurrency are now the biggest beneficiaries of legitimized crypto regulation.

This is not the revolution anyone expected, but perhaps it is the revolution we ultimately got. Strangely enough, it is quite "genius."

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。