Written by: Zhu Weisha, Wang Yuxiao

Stablecoins are a hot topic, referring to a type of cryptocurrency that is backed by secure financial assets and pegged to the value of fiat currency. They represent the most practical application of cryptocurrency beyond its original scope, initiating a journey of financial transformation. As a key tool connecting traditional finance and the crypto ecosystem, the introduction of the U.S. "Genius Act" and Hong Kong's "Stablecoin Regulation" marks the beginning of global financial systems regulating this emerging field.

Although the purposes of the stablecoin legislation in the U.S. and Hong Kong differ, both are based on the practices of cryptocurrency stablecoins, aiming to expand them into the existing fiat currency system in a way that benefits themselves. Comparing the similarities and differences between the two regions' legislation helps us understand the trends in future financial development. This is a significant event in human progress, marking a major step forward in the financial revolution initiated by a new generation of cryptocurrency elites represented by Satoshi Nakamoto. The content of the legislation will not be elaborated on here, nor will its advantages be discussed, as there are already many related articles; we will mainly discuss the issues here.

Neither legislation includes final rescue measures

Rescue measures are essential for the stability of the financial system. The most famous example is the financial tsunami in the U.S. during 2008-2009, where the joint rescue by the U.S. government and the Federal Reserve restored financial stability. For the U.S. "Genius Act," rescue measures are necessary because reserve assets are strictly limited to short-term U.S. Treasury bonds, U.S. dollars, and other high liquidity, low-risk dollar-denominated assets; in contrast, the category of reserve assets allowed for stablecoin issuance in Hong Kong permits a combination of assets (including non-HKD assets), making government rescue seem less necessary for Hong Kong.

In fact, stablecoins have previously received assistance from the Federal Reserve. When Silicon Valley Bank went bankrupt in March 2023, the second-largest stablecoin, USDC, saw its value drop by more than 10%. Later, the Federal Reserve intervened to rescue Silicon Valley Bank, preserving the $3.3 billion of USDC stored there, allowing USDC to return to $1. However, in the U.S. "Genius Act," we only see the regulatory body: the Office of the Comptroller of the Currency, but not the potential rescue entity—the Federal Reserve or a similar institution.

Without a licensing system, the stability, safety, and convertibility of stablecoins rely on unreasonable "pulling the plug" guarantees. In the same incident, many investors, including Sun Yuchen, exchanged and redeemed large amounts of USDC, causing its price to drop due to massive redemptions. At that time, cryptocurrency and stock trading platforms like Robinhood, exchanges like Binance and Coinbase announced the suspension of some USDC services, effectively prohibiting redemptions. Additionally, in 2021, the largest stablecoin, USDT, processed $700 million in redemption requests within 48 hours, and it took 40 days to handle $2 billion in redemption requests, accounting for 22% of its reserve assets. Such handling would be impossible in traditional finance.

Once laws are established, they must be followed. From the perspective of the legislation, the issuance of stablecoins is managed according to traditional financial principles. The U.S. reserve assets are clearly defined as "cash in U.S. dollars, insured deposits by the Federal Deposit Insurance Corporation (FDIC), U.S. Treasury bonds with maturities of 93 days or less, overnight repos supported by the New York Fed, and central bank reserves." This makes the Federal Reserve's rescue very reasonable. Hong Kong's requirements for reserve assets are broader, allowing for a portfolio of assets, which theoretically increases uncertainty with more asset types. USDC deposits dollars in multiple banks, increasing the uncertainty brought by banks; if a bank fails, it suffers. In contrast, USDT primarily purchases U.S. Treasury bonds, avoiding the fallout from the bankruptcy of individual U.S. banks. The broad definition of portfolio assets in Hong Kong means that the risk of reserve assets is higher than in the U.S., and the difficulty of rescue is similarly elevated. However, since most issued stablecoins are not HKD stablecoins, the responsibility for rescue does not fall on the Hong Kong government. The Hong Kong government's handling of this is quite astute.

From the U.S. perspective, does the government need to back dollar stablecoins? It only maintains the stability of the dollar; the stability of stablecoins is the responsibility of each issuer, and if problems arise, each issuer bears the consequences. If an ecosystem is rational, it is like each cryptocurrency ecosystem not affecting one another. If it is a single ecosystem, and the foundation has issues, such as the cryptocurrency Luna failing as the base of the ecosystem, all projects within that ecosystem could collapse. In other words, if the collateral projects on Luna fail, they drag down the entire Luna ecosystem. All issuers of dollar stablecoins belong to the dollar ecosystem, and based on cryptocurrency practices, a safety net is needed. Finance serves as a testing ground for society as a whole, with no examples until something happens. Once it occurs, the costs are very high. Cryptocurrency is also finance, and the realm of cryptocurrency constitutes a "testing ground" for traditional finance, where the lessons learned are invaluable. All examples could potentially reappear in a new stablecoin environment.

A thousand-mile dam can collapse from an ant hole. The algorithmic stablecoin UST (Luna) team caused a chain reaction with a single action of reducing collateral interest, leading to a $100 million sell-off for arbitrage, resulting in the collapse of stablecoin UST (Luna). Although they attempted to rescue it with the help of industry insiders, reportedly spending tens of billions of dollars, its market value nearly reached zero in just a few days. A market cap of over $30 billion ultimately triggered a $700 billion loss in the cryptocurrency market. The adjustment time for cryptocurrencies is faster than that of traditional financial systems. Fortunately, it did not infect the fiat currency system because the two systems are isolated. It was Powell who prevented the chain reaction of fiat currency from the collapse of UST (Luna). Once the two systems are interconnected, we face unknown new situations, and the extent of the chaos is uncertain.

Finance is a game of chess, maintained by trust; human trust can instantly turn into fear. Cryptocurrency operates in a global market without barriers. If the financial storm of 2009 had occurred in the cryptocurrency realm, there might not have been time for rescue.

Finance is a game of chess. The cryptocurrency exchange FTX went bankrupt due to Luna; if it had survived until today, FTX's asset value would have recovered. The failure of Luna lies in the absence of an overall rescue measure. If the Federal Reserve had intervened back then, it would not have failed, and there would not have been a $700 billion loss in cryptocurrency. Of course, this matter has nothing to do with the Federal Reserve; it would not intervene, but the fire ultimately burned it as well.

Finance is a game of chess. The HKD belongs to the dollar ecosystem. When Hong Kong becomes a cryptocurrency financial center with a fast financial system, the losses incurred are unrelated to the Hong Kong government, which does not need to provide a safety net. Once the opportunity is missed, the problem may become irreparable. The U.S. legislation only allows institutions with banking licenses to issue stablecoins, while Hong Kong is not limited to banking licenses. There is a possibility that a large tech company from the U.S. could issue stablecoins in Hong Kong. When companies can issue stablecoins, the fiat currency used as reserve assets is opaque, and the potential for fraud is high. The current Hong Kong "Stablecoin Regulation" may become a feast for speculators and could very likely become the starting point for a financial tsunami.

The issue of time lag in trading stablecoins and fiat assets

Stablecoins trade 24/7, as does foreign exchange. However, the reserve assets of stablecoins do not. This issue is not very prominent in the U.S. However, for Hong Kong, the various combinations of reserve assets can lead to time lag issues in trading, creating discrepancies between the primary and secondary markets.

The Hong Kong government stabilizes the HKD by buying and selling at regulated prices in the secondary market; stablecoins are stabilized by arbitrageurs through arbitrage between the secondary and primary markets. When the price in the secondary market falls below $1, arbitrageurs can profit by purchasing stablecoins in the secondary market and redeeming them with the issuer at a 1:1 ratio for $1 in the primary market. This arbitrage process also means that when the stablecoin issuer sells reserve assets to meet the cash redemptions of arbitrageurs, the selling pressure from secondary market investors will ultimately trigger the sale of reserve assets. For large players like the Hong Kong Monetary Authority, due to their credibility, the delay in settling reserve assets can be covered by the foreign exchange secondary market exchanges providing fiat currency for advance payment and exchange. However, smaller stablecoins, even with reserve assets, may lack sufficient credibility; if there is no rescue or if the timing of the rescue does not align, a run on the stablecoin can occur. This is particularly evident in the cryptocurrency realm, as all on-chain assets are traceable, and any discovered vulnerabilities can be exploited.

Regulators and market participants hope that stablecoins can have both low run risk and maintain price stability, but these two goals are contradictory and driven by different forces. Especially under the regulations, allowing unlimited redemptions for stablecoins increases arbitrage efficiency, which can improve price stability under normal circumstances, but in panic situations, it can lead to higher run risks.

The time lag issue between stablecoins and fiat currency systems can pose risks if not adequately addressed.

Once panic arises, it is always excessive; this is the butterfly effect of the Amazon rainforest.

The U.S. approach to issuing dollar stablecoins does not align with the practice of issuing HKD

Hong Kong requires a capital of HKD 25 million or equivalent assets to obtain a license to issue specific stablecoins, meaning that offshore RMB or dollar stablecoins can be issued in Hong Kong. Unlike the U.S. legislation, Hong Kong allows multiple qualified entities to issue stablecoins, adapting to its status as a financial center.

In fact, Hong Kong does not need to issue HKD stablecoins the most.

The HKD is essentially a stablecoin for the U.S. dollar, just not in a cryptocurrency form. The issuance level of the HKD remains the ceiling for sovereign stablecoin issuance. The HKD is issued by three major banks: HSBC, Standard Chartered, and Bank of China. The HKD operates well, and the Hong Kong team is the only one in the world with over 40 years of stablecoin management experience. Why can’t any bank in Hong Kong issue currency? Why don’t they apply existing experiences? This has deep implications and requires extensive discussion, which is beyond the scope of this article.

Here, I will only state the conclusion:

The experience of issuing HKD indicates that the U.S. approach to issuing dollar stablecoins does not align with the practice of issuing HKD. Can the stablecoin experience that has succeeded in a small range of cryptocurrency be applied almost unchanged to a more complex financial environment?

Hong Kong has established rules for stablecoin issuance, with relaxed issuance conditions and detailed regulations for violations, which falls under strict regulation, allowing various stablecoins to be issued. The U.S. pursues dollar hegemony, while Hong Kong seeks to be a financial center. This is the fundamental difference between the two pieces of legislation.

The purposes of the two are different, making it difficult to say that the U.S. should adopt the HKD model for issuing stablecoins, but who can clearly articulate the risks of U.S. stablecoins?

This reminds us of Soros

Is the risk of stablecoins really small? Currency is a unit of account and the foundation of all financial activities. Pulling one thread can affect the whole fabric. When Soros targeted the HKD, it was a coordinated action involving the stock market, futures, and foreign exchange markets. If Hong Kong had not had the support of the Chinese government and the efforts of Hong Kong officials, Soros would have succeeded.

Historical records document this difficult moment:

"Hardline Tung Chee-hwa did not want to give up the peg, struggling to survive."

"After a difficult decision, Tung Chee-hwa made a historic decision: rather than let the wealth of the Hong Kong people fall into the hands of speculators, it was better for the government to enter the market, use foreign exchange reserves, and take a gamble."

"Subsequently, Tung Chee-hwa and Henry Tang reported this idea to then Chief Executive Tung Chee-hwa. The anxious duo did not expect that it took Tung Chee-hwa only half an hour to approve it."

"At this point, Tung Chee-hwa knew very well that using the hard-earned money of the Hong Kong people to gamble was risky; if they won, it would be fine; if they lost, not only would they have to resign in shame, but even dying to apologize would be too light a punishment. However, there was no other good path left for them."

"That night, Tung Chee-hwa cried all night. Sometimes, history requires some people to make difficult decisions. The final showdown between the two sides arrived as scheduled." (Quoted from Shen He Jun, Alchemy Professor)

This is the greatest challenge faced by the Hong Kong dollar. If Hong Kong had failed at that time, it would have regressed by more than 10 years. The financial literacy of Hong Kong people back then was extremely high. August 28, 1998, was the decisive day. The great people of Hong Kong united as one, coordinating with the government to support the stock and foreign exchange markets, while the banking sector raised short-term borrowing rates. By 4 PM, the Hang Seng Index finally closed at 7829 points! The total trading volume reached a historic high of HKD 79 billion in the Hong Kong stock market! The Hang Seng Index futures ultimately settled at 7851 points. Over a total of 10 trading days, the Hong Kong government utilized foreign exchange reserves equivalent to HKD 120 billion, raising the Hang Seng Index by 1169 points. Hong Kong emerged victorious.

Salute to the heroes who defended Hong Kong.

Now, compared to when Soros targeted the Hong Kong dollar, there is an additional cryptocurrency market, with the stock market, futures market, foreign exchange market, and stablecoin market all interacting. What results will this produce? I believe the world's most astute financial speculators are already contemplating this, especially since they control significant financial power. Moreover, stablecoins are a new phenomenon, with institutional loopholes waiting to be discovered.

We have seen the Trump administration attempt to use stablecoins to strengthen the dollar and address the U.S. debt issue, which is a great and ambitious idea. However, it is based solely on the successful experience of stablecoins in a small range of cryptocurrency experiments, which does not include final rescue measures; furthermore, the Federal Reserve and the government are not subordinate to each other; obstacles are everywhere; it is indeed not easy to think about. Once institutional loopholes are exploited, if a financial tsunami occurs, the government will inevitably incur enormous costs to compensate.

The fixed exchange rate and leverage issues of stablecoins

In my article "Using the Hong Kong Dollar to Achieve Bitcoin Standard," I analyzed the Hong Kong dollar, explaining that the economic fundamentals represented by the Hong Kong dollar are stronger than those of the U.S. The confrontation with Soros does not depend on fundamentals but on short-term liquidity; whoever has more money wins.

Maintaining a fixed exchange rate is challenging, and historical experience dictates that the Hong Kong government avoids mentioning a stablecoin for the Hong Kong dollar. What impact would issuing a stablecoin for the Hong Kong dollar have? In fact, issuing a stablecoin for the Hong Kong dollar would leverage the Hong Kong dollar; if it maintains its peg and resolves 24-hour convertibility, the initial risk does not seem significant.

If the market experiences a Soros-style attack again, leverage would amplify the force of the attack. What would an attack under the new circumstances look like?

We do not know how large this leverage is. The quantity of financial assets exceeds that of currency. The U.S. legislation includes a clause prohibiting the re-collateralization of stablecoins. In fact, there is no need for collateral; when issuers issue stablecoins, they receive fiat currency, which can then be used to purchase short-term U.S. Treasury bonds, becoming reserve assets, and then used to issue stablecoins. One dollar can buy two dollars' worth of bonds, which is beneficial for digesting bonds. If we think further, could it form a third, fourth purchase, or even more?

For stablecoin issuers, reserve assets earn interest, while stablecoin purchasers do not have to pay interest, implying a highly profitable business model. In the U.S., it is not a problem for banking institutions to issue stablecoins, but according to Hong Kong's "Stablecoin Regulation," the issuers of stablecoins are diverse, and non-bank institutions are not subject to banking compliance regulations, which undoubtedly amplifies the risks of the entire financial system.

The following statements are purely hypothetical.

Exchanging fiat currency for stablecoins is legal, stablecoins do not earn interest, and purchasing government bonds with fiat currency that does earn interest is also legal, benefiting the issuer. Since it is not collateralized, it is not impossible for issuers to cycle and amplify. According to Hong Kong's approach, if bond-type reserve assets are included, it can achieve up to 9 times leverage; if all are cash reserve assets, it can be even more. When companies obtain licenses to issue stablecoins, if they cycle the issuance of stablecoins to earn interest, should there be regulation? How should it be regulated?

The number of coins issued by commercial banks should be counted in M2 (broad money). The leverage brought by stablecoins theoretically should be included in the U.S. calculations, but how should it be counted? This poses a new challenge for U.S. monetary management. If it is not a stablecoin for the Hong Kong dollar, it should not need to be counted.

Countries that adopt a fixed exchange rate, like Malaysia and Thailand, could not withstand Soros's attacks. For countries wanting to issue stablecoins, it effectively leverages their own fiat currency, amplifying the risks in liquidity. The issuance of sovereign currency should be based on fundamentals; thus, does issuing stablecoins amplify financial bubbles?

There are many such questions that remain unclear and many new issues to consider.

Of course, where there are benefits, there are drawbacks, and we must discover these through practice; moving forward is better than stagnation.

The issuance of sovereign stablecoins: the Hong Kong Monetary Authority is an example

How should stablecoins be issued? The current method is for each entity to issue one. How many currencies can people in the world remember? Remembering 30 is already quite good. If thousands of households issue stablecoins, can we remember them all? There is a significant flaw in this design.

The Hong Kong dollar issued in Hong Kong is essentially a stablecoin for the U.S. dollar, using the same name: HKD, which has operated for decades without incident, demonstrating the reasonableness of its issuance. Hong Kong has three note-issuing banks: HSBC, Standard Chartered, and Bank of China, and they do not issue separate currencies like HSBC Coin, Standard Chartered Coin, or Bank of China Coin; all issued currency is called the Hong Kong dollar. The Monetary Authority is responsible for maintaining the stability of the Hong Kong dollar, rather than each bank maintaining the stability of its own currency. The Hong Kong banking sector collectively maintains the stability of the Hong Kong dollar, which is far less risky than each bank maintaining its own. This is the correct method of issuing a sovereign linked exchange rate stablecoin, proven by history. Of course, the U.S. is an exception, as the dollar is currently the reserve currency.

The excellent designer of Hong Kong's linked exchange rate is Sir John Henry Bremridge.

The Monetary Authority provides a safety net for the stability of the Hong Kong dollar, which is a form of rescue. Does every stablecoin issuer have the ability to back their issued stablecoins?

The current methods of stablecoin issuance clearly have three major risks: no safety net measures, opacity of fiat assets, and lack of uniformity in the names of issued stablecoins.

Safety net measures are not a technical issue; the latter two problems can be solved with technology.

These two pieces of legislation are old wine in new bottles

Due to the opacity of the fiat currency backing stablecoins, both the U.S. and Hong Kong naturally thought of regulating stablecoins through regulatory banks. The lack of transparency regarding reserve assets necessitates reliance on audits or verification methods to ensure trust, which raises market concerns. For example, the Bank for International Settlements (BIS) has expressed concerns about the true reserves behind stablecoins, especially for projects like Tether (USDT), which have a high market share but lack transparency.

Does the Bitcoin system need management? No! Because it is a transparent ledger. Satoshi Nakamoto quoted David's words "the ledger needs to be public" in the white paper, using David's article as the first citation in the white paper. This is actually the core concept of Satoshi's white paper. The concepts of decentralization and blockchain are at a lower level than this concept.

Ledger transparency reconstructs the responsibility mechanism of financial intermediaries like banks. The responsibility of traditional financial intermediaries mainly relies on trust and compliance statements, while the Bitcoin system transforms "intermediary responsibility" into "verifiable behavioral responsibility" and "programmatic structural responsibility" through a transparent ledger. This transformation is not just a technological upgrade; it is a deep restructuring of the logical framework of financial intermediaries. Satoshi combined immutable ledgers + computing power + timestamps to construct a system that does not require trust in anyone while establishing trust through the connection of credible blocks.

This trust system adopts a publicly transparent and verifiable approach, creating a credit root out of thin air; the transmission of credit is driven by program logic, cleverly achieving process credibility. This idea is far more advanced than generating a credit root using a Trusted Execution Environment (TEE) in computers. The secure area of a computer is generally inaccessible to the public, while it is open to core programmers. We cannot verify and must trust them, just as we need to trust that banks will not act maliciously. In traditional computer theory and social practice, the roots of credit are all risky because of the issues of unverifiability and verification delays, which Satoshi cleverly resolved.

Neither piece of legislation conforms to the aforementioned characteristics. They do not utilize the advanced ideas of cryptocurrency and have significant room for improvement.

We need a low-cost regulatory system

The Hong Kong "Stablecoin Regulation" is detailed, requiring daily public disclosure of assets. It mandates a 110% reserve, which is well-written. However, how can the authenticity of the materials be judged? The proof of reserves based on Merkle trees published by Binance, the leader in cryptocurrency, is meaningful, but the market does not accept it and raises many doubts because it does not align with the ideas of cryptocurrency; in other words, the way Binance's credit root is generated is not credible enough. Similarly, today's legislation does not conform to the ideas of cryptocurrency. It is even less credible than Binance, completely failing to address the credibility of the credit root.

The essence of Satoshi's thought is to utilize ledger transparency to embed the regulatory responsibility mechanism within the ledger structure, no longer relying on post-audit or statements, but existing in real-time within the data, integrating management and processing. If we still require post-audits, it does not match the progress of the times.

An excellent regulatory system should be low-cost. If it cannot match the scale of Web3 teams, we need to reflect on what went wrong. Bitcoin has only four maintainers, the Ethereum Foundation has about 30 people, and USDT (Tether) has just over 100.

If we can make the fiat currency reserve assets corresponding to stablecoins transparent, it will reconstruct the regulatory responsibility mechanism of financial intermediaries. Regulating based on ledger transparency will significantly reduce regulatory costs. The concerns of the Bank for International Settlements (BIS) regarding the true reserve status behind stablecoins will also be alleviated.

Issuing transparent stablecoins is the upgrade of traditional finance

The "Unified Ledger" design promoted by the Bank for International Settlements (BIS) is overly complex, facing numerous challenges in multi-technology architecture compatibility, cross-institutional collaboration, and multi-regional regulatory adaptation. In other words, using pure blockchain and consortium chains is insufficient to construct a ledger transparency intermediary platform that is "visible + controllable + verifiable + upgradable." The blockchain ledger is an excellent template, but it has shortcomings when applied to traditional finance and needs to be innovatively reformed based on Satoshi's ideas.

We need to solve the problem of opacity in fiat assets, ensuring that both stablecoins and the underlying assets are transparent. By transmitting trust through technological innovation based on Satoshi's transparent ideas, issuing transparent stablecoins is a better solution that aligns with the current objectives of stablecoin issuance.

Taking it a step further, using transparent stablecoins can actually realize the issuance logic of the Hong Kong Monetary Authority for the Hong Kong dollar, meaning all banks can issue stablecoins under the same name. Not only large banks but any small bank can issue a transparent stablecoin with the same name. Using the issuance of stablecoins by banks as an opportunity, we can gradually achieve transparency in banking operations, utilizing Web3 ideas and technologies to thoroughly transform the traditional financial industry and avoid the collapse of the banking sector.

Satoshi Nakamoto's ideas are not only applicable to transparent stablecoins. Expanding on Satoshi's transparent ideas, we welcome transparent stablecoins, transparent banks, transparent contracts, transparent exchanges, and transparent enterprises. This is a potential direction for the future development of the financial industry and businesses.

Utilizing transparent stablecoins can address two of the three major issues in stablecoin issuance. The technological potential demonstrated by Satoshi's ideas and the practices of the Bitcoin system can facilitate a technological upgrade in the traditional financial industry.

By the way, banks' KYC (Know Your Customer) and AML (Anti-Money Laundering) practices are mature. Generally, companies find it difficult to pass KYC and AML checks. In the U.S., the entities issuing stablecoins are banks, which is somewhat better.

How to Move Forward

The release of the legislation aligns with historical trends and addresses the root of the problem. The issues are accurately identified, but the methods still need to be iterated.

This is a chaotic world; the old order has broken down, and the new order has yet to be established. The legislation emerges to establish a new order, which may bring opportunities but could also lead to new chaos. I believe Americans are psychologically prepared for disorder. Great disorder leads to great governance, and only great politicians dare to take such risks.

However, risks must be taken. The lifecycle of the credit dollar has already passed the halfway mark. For more on this, refer to my article "Predicting When the Dollar Will Collapse from the Natural Growth Curve," where I discuss that the root of the current chaos in the world lies in fiat currency, as the saying goes, "the scales are unbalanced." Proponents of fiat currency scoff at this view. The summer insect cannot speak of ice; if fiat currency had no issues, Bitcoin would not have emerged.

There is a viewpoint that stablecoins are more important than Bitcoin as a strategic reserve, with a higher priority. This is not the case; Bitcoin should be the primary strategic reserve for nations. This is because Bitcoin as a strategic reserve carries no unknown risks, and operational funds are not an issue. In contrast, stablecoins carry unknown risks, which cannot be guarded against.

Bitcoin as a strategic reserve is what the U.S. should prioritize right now. Besides purchasing Bitcoin itself, the U.S. can leverage its super influence to encourage the public to follow suit, locking a large amount of dollars into Bitcoin. Just as Chinese real estate has served as a reservoir for locking in renminbi, bringing forty years of prosperity to China. Only the demand for new assets can drive prosperity fundamentally.

For the world economy to thrive, new growth points are needed. If we believe that a Bitcoin standard will replace a dollar standard, Bitcoin is a better growth point for the world economy than Chinese real estate, because Bitcoin does not have a price ceiling, while real estate does. Bitcoin also has four and a half cycles of 18 years of rapid growth ahead. Interested readers can refer to the article "Bitcoin's Natural Growth Curve" for a predictive curve describing Bitcoin's price changes over 30 cycles. The fourth cycle described in that article has already been realized as a turning point, with the fifth cycle projected at $200,000, and the peak between $220,000 and $240,000. Compared to artificial intelligence, Bitcoin as a strategic reserve is inclusive and represents a new growth point for overall economic prosperity.

Currently, stablecoins are expanding the scope of transactions. Transactions are complex, ultimately making finance the leader in all industries. The financial legal system we have established is also the most extensive. Transactions serve the purpose of asset demand, not the other way around. This is two sides of the same coin, mutually reinforcing. Economic growth must come first; when the economy grows, it covers up many flaws. Ignoring Bitcoin as a strategic reserve means overlooking the greatest engine of economic growth.

Bitcoin as a strategic reserve is simple; it should be straightforward. The U.S. can gradually complete the transition from a fiat currency system to a Bitcoin system over fifty years through Bitcoin as a strategic reserve. Even if stablecoins encounter some issues, the presence of Bitcoin as a national strategic reserve provides a hedge, giving the overall impression that the U.S. cryptocurrency strategy is quite good. Bitcoin as a strategic reserve is timely; the sooner, the better, and it should be prioritized.

For more on Bitcoin as a strategic reserve, refer to my article on the Chainless website titled "Implementing a Bitcoin Dollar Standard." This plan has similarities to the proposal by U.S. Senator Lummis, and there is a section titled "Bitcoin Dollar Standard” that includes 16 articles. I will not elaborate further here.

Regarding the relationship between Bitcoin as a strategic reserve and stablecoins, the website also discusses this. My position is that the transition from fiat currency should proceed in three steps: Bitcoin strategic reserve, Bitcoin dollar standard, and Bitcoin standard. The U.S. is currently on the second step, although it may not look the same as described, the goal is the same. However, the U.S. has skipped the first step.

If you are unfamiliar with cryptocurrencies, our Chainless website can quickly help you understand why fiat currency is destined for extinction and why cryptocurrency is the future. History has its own laws and does not change according to people's will.

Currently, the preparation for the stablecoin legislation is still insufficient, both in the U.S. and Hong Kong. The impact of stablecoins on the market is multifaceted, touching the fundamentals of finance and affecting everything. Moreover, since everything is related to stablecoins, there are unpredictable risks.

The introduction of an imperfect piece of legislation indicates that we need an independent cryptocurrency advisory committee, with a broad scope that must include Satoshi Nakamoto. By absorbing top-tier wisdom to reduce the occurrence of chaos, we can minimize confusion; why take risks if we can reduce chaos?

Based on the achievements of cryptocurrency, using a simple ledger as a foundation to form a trustworthy chain is the simplest method for issuing transparent stablecoins. Before the launch of transparent stablecoins, there were significant regulatory loopholes, and a financial tsunami could strike at any time. The government needs to act prudently to quickly close these loopholes.

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