The GENIUS Act being discussed in Washington has drawn attention from cryptocurrency supporters, claiming it will ensure the dollar’s supremacy for years to come. Politicians present it as a significant victory against competing currencies, yet many overlook its deeper implications. Rather than safeguarding the dollar, the act provides a roadmap for other nations to establish their own digital currencies.

Regulatory Clarity Cuts Both Ways

While the GENIUS Act delivers much-needed clarity for U.S. stablecoin transactions with distinct reserve requirements and regulatory oversight, it also establishes a model that various countries are now starting to adapt for their currencies. Initiatives such as Japan’s JPYC and Hong Kong’s digital currency standards draw heavily from the U.S. framework. However, the act fails to tackle the significant roadblocks affecting global adoption of these stablecoins, specifically local liquidity challenges that can lead to high conversion costs during international transactions.

The Dollar Detour Problem

A Brazilian worker in Japan demonstrates the inefficiencies of the current system, where they must convert yen to dollars, then acquire USD stablecoins, and subsequently exchange those for Brazilian reals—choosing to navigate this through expensive conversions and risks.

The Unintended Revolution

The global reach of the GENIUS Act might lead to outcomes that its authors didn’t foresee, as it minimizes the risks associated with sovereign stablecoin projects. Regions like Japan and Hong Kong are already leveraging American legislation for their digital currency frameworks.

Regulatory Harmony Means No Monopoly

Harmonization among various jurisdictions allows multiple economies to introduce compliant local stablecoins, which reduces regulatory hurdles globally while diluting any single currency’s control over digital payments, potentially paving the way for local currencies to be favored in daily transactions.

The Plural Future of Money

Ultimately, the GENIUS Act underscores the reality that innovation flourishes with clear regulations, leaving behind protective barriers that stifle competitiveness. Instead of reinforcing the dollar’s status in digital transactions, it champions a future where local currency digitization thrives across various economies. The era of stablecoins is just beginning, and it promises to be diverse and inclusive.