Stablecoin Storm | Crypto Game of US Dollar Hegemony and US Debt Crisis The collapse of the Bretton Woods system was due to the global rescue of the United States, while the implementation of stablecoins was an attempt by the United States to make global retail investors and informal institutions pay for the US debt crisis. In May 2025, the United States Senate passed the GENIUS Act with a procedural vote of 66 in favor and 32 against, marking the first comprehensive federal regulatory framework for stablecoins in the United States. This is not only a reform in financial regulation, but also seen as a strategic layout for the US dollar to continue its hegemony in the digital economy era. However, for many people, "stablecoin" is still a foreign concept: what exactly is it? Why is it so important? Why has the United States shifted from suppression to 'appeasement'? How should China respond? Stablecoin is a cryptocurrency that achieves price stability by being pegged to the US dollar, gold, or other fiat currencies, or through algorithmic mechanisms. Unlike volatile cryptocurrencies such as Bitcoin, stablecoins are named 'stability' and aim to provide a reliable medium of exchange for the digital economy. Its core mechanism is that the issuer needs to deposit equivalent assets (such as US dollars or US treasury bond) to issue stable currency of corresponding amount. This "1:1 anchoring" ensures its value stability and makes stablecoins the "embodiment of the US dollar" on the chain. You may ask: Since you need to deposit one dollar to issue one dollar stablecoin, why don't users directly use dollars? The answer lies in the unique advantages of stablecoins. Traditional banking systems such as SWIFT take 1-5 days for cross-border transfers, with fees as high as 5-7%, while stablecoins support almost real-time global transfers, with transaction confirmations taking only seconds to minutes and fees typically below $0.1. This efficient and low-cost feature makes it shine in cross-border payments. In addition, in inflation ridden countries such as Argentina, Türkiye or Venezuela, the stable currency has become a "digital safe haven" for people to avoid the devaluation of their own currency, and can obtain and hold "dollars" at a low threshold. In sanctioned countries such as Russia or Iran, stablecoins are even used by governments to bypass financial blockades. In the dark web or black market, stablecoins have long replaced cash as the preferred tool for anonymous transactions. Someone may ask, will the market believe the issuer if they deposit US dollars or assets at a 1:1 ratio? The answer is that credit is gradually established through transparency and regulation. The reason why the largest stablecoins USDT and USDC can grow is because they regularly disclose their audit reports. And the dominant position in the market, in turn, deepens their credit. Additionally, credit is also subject to comparison. For citizens of Argentina or Turkey, stablecoins may have the risk of depreciation and collapse, but they are much more reliable than domestic currencies. Not to mention countries and gangs sanctioned by the United States, they both need to use the US dollar and are restricted from using it. Cryptocurrencies like Bitcoin fluctuate too much, and stablecoins are their best choice. To use a metaphor that is easier for Chinese people to understand, stable currency is like the money in "Alipay". Your money is not in the bank, but you can transfer it, consume it, or deposit it. Few people doubt that the money in Alipay will depreciate or collapse. Of course, stablecoins are not the US dollar after all, so stablecoins have also collapsed in the past. The collapse of TerraUSD (UST) algorithmic stablecoin in 2022 resulted in a loss of $200 billion for global investors, exposing the risk of insufficient reserve stablecoins and highlighting the importance of 1:1 fiat reserves and transparent auditing. This also laid the groundwork for subsequent regulatory legislation in the United States. As of May 2025, the total value of the global stablecoin market has exceeded 250 billion US dollars. Standard Chartered and Bitwise predict that by 2028, this market may expand to $2 trillion to $2.8 trillion. In 2024, the annual transaction volume of stablecoins reached $27.6 trillion, surpassing the total transaction volume of Visa and Mastercard (approximately $25.6 trillion), with a year-on-year growth of 7.68%. Among them, Tether's USDT accounts for 79.7% of the trading volume, followed closely by Circle's USDC, with a combined monopoly of about 98% of the market. Such a massive scale has forced the US government to re-examine stablecoins. In the early days, stablecoins were not valued due to their limited size (with a market value of only $5 billion in 2020). The market value of stablecoins surged to $130 billion in 2021, and the collapse of TerraUSD (UST) in 2022 resulted in a loss of $200 billion, raising concerns about systemic risks. The Biden administration had suggested bringing stablecoin issuers into the banking regulatory system. However, the explosive growth and trading volume of stablecoins have surpassed traditional payment giants, causing the United States to shift from a wait-and-see approach to actively embracing them. In 2025, after Trump took office, the Republican Party's "pro stablecoin" policy will prevail. The GENIUS Act emerged, with core provisions including: Reserve requirements: The stable currency must anchor the US dollar or highly liquid assets (such as US treasury bond bonds) at 1:1 to ensure stable value. Issuance license: Non banking institutions need to obtain a federal license to curb 'savage growth'. Mandatory audit: Issuers with a market value exceeding $5 billion are required to undergo regular audits to ensure transparency and compliance. Prohibit interest payments: prevent stablecoins from evolving into "shadow banking" products. On chain regulation: Regulatory agencies can directly freeze or restrict illegal transactions on the blockchain. These terms may seem strict, but they are actually intended to support domestic publishers in the United States (such as Circle, the publisher of USDC) and restrict players with non American backgrounds (such as Tether registered in Hong Kong). USDC is strictly regulated by the United States, with transparent reserves consisting of US dollar cash and short-term government bonds; Although USDT claims to anchor 1:1 to the US dollar, its reserve transparency has been controversial, and in 2021 it was fined $41 million by the CFTC for insufficient disclosure. In the future, besides the trading platform track, we will have the crypto world of stablecoin holders!