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GENIUS Act Passed: Could This Mark a Turning Point for USDC to Surpass USDT?
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Recently, U.S. President Donald Trump officially signed the GENIUS Act at the White House. This historic piece of legislation not only signifies the formal inclusion of the stablecoin industry within the federal regulatory framework, but also lays the institutional groundwork for the next phase of global digital currency development.
As the first crypto asset–related bill signed by a U.S. President, the GENIUS Act resolves long-standing regulatory ambiguity by providing a clear, unified, and actionable framework for U.S. dollar–backed stablecoins. Its broad impact and deep significance merit close examination.
1. Core Provisions: Stablecoins Enter a Regulated Financial Framework
The GENIUS Act sets clear regulatory boundaries for U.S. dollar–backed stablecoins, marking the first time national legislation has imposed concrete requirements on their definition, operating mechanisms, issuance conditions, and risk controls. The core provisions include:
Regulatory Approval: Issuers must obtain authorization from federal or state financial regulators.
Reserve Requirements: Stablecoins must be backed 1:1 by U.S. dollars or equivalent U.S. Treasury securities. Structured financing and illiquid collateral are prohibited.
Operational Transparency: Monthly audit reports are mandatory, and issuers must be subject to regulatory oversight and enforcement authority.
This not only draws a clear line between compliant and non-compliant activities, but also provides institutional legitimacy for traditional financial institutions, payment companies, and major tech platforms to enter the stablecoin space.
2. Beyond Regulation: An On-Chain Extension of U.S. Dollar Hegemony
The act is not merely about “stablecoin oversight”; its deeper logic centers on reinforcing the U.S. financial system and extending its global influence.
The reserve mechanism effectively brings stablecoin issuers into the buyer pool of the U.S. short-term Treasury market. As stablecoin adoption grows, so does demand for T-bills, directly easing the Treasury Department’s funding pressures amid high national debt. In other words, the growth of on-chain dollars is feeding back into and strengthening the traditional U.S. dollar system. Moreover, as blockchain infrastructure increasingly becomes the foundation for cross-border payments, trade settlement, and financial services, the GENIUS Act accelerates the U.S. dollar’s transition from a sovereign currency to a network currency.
This represents a synthetic hegemonic structure, forged through regulation, market response, and sovereign expansion.
3. Restructuring the Stablecoin Industry: Leading Players Emerge
3.1 USDC: Primary Beneficiary of Regulatory Clarity
USDC, issued by Circle, has long adhered to a 1:1 backing with U.S. dollars and Treasury securities and undergoes regular audits—positioning it ahead in the compliance race. Circle’s CEO stated that the company intends to leverage the advantages of the GENIUS Act to continue its growth and further integrate into the mainstream financial system. Fundamentally, USDC is expected to become the preferred stablecoin for payments and transactions, with its market share projected to expand accordingly.
3.2 USDT: Market Leader Facing Heightened Compliance Pressure
Tether’s USDT continues to lead in scale and market depth but still falls short of the GENIUS Act’s standards in areas such as reserve structure and auditing practices. Tether CEO Paolo Ardoino has announced plans to complete compliance audits within three years to align with the new regulatory framework.
As the world’s largest stablecoin, failure to meet compliance deadlines could subject the company to regulatory pressure to exit key U.S. markets. USDT’s dominance is now facing a credible challenge.
3.3 Decentralized Stablecoins: Regulatory Headwinds and Structural Challenges
Decentralized stablecoins, such as DAI, emphasize censorship resistance and transparency in their design. However, their inability to provide off-chain dollar reserves, and their use of yield-bearing assets—may result in them being classified as securities, subject to stricter regulatory scrutiny. Their continued viability will depend on flexible adjustments to product positioning and alignment with evolving regulatory standards.
4. Structural Shifts in DeFi and the RWA Ecosystem
One of the GENIUS Act’s most significant implications is its impact on on-chain yield models. With stablecoins prohibited from generating interest, the foundational “deposit-and-earn” model in DeFi is likely to be compressed. DeFi protocols will need to pivot toward alternative yield mechanisms based on non-payment tokens or explore redesigned models anchored in real-world assets (RWAs).
Driven by regulatory clarity, the on-chain RWA sector is expected to enter a new phase of growth. Using stablecoins as a settlement medium, real-world financial instruments, such as bonds, accounts receivable, and commercial paper, can be issued, traded, and custodied on-chain. This transition marks a shift from blockchain as a “virtual asset system” to a “real-world financial infrastructure,” providing stronger value anchoring and improved capital efficiency.
5. Divergent Impacts of Global Monetary Policy Linkages
The GENIUS Act also places significant pressure on other countries.
The U.S. is leveraging “on-chain dollar compliance” to establish a new frontier of global financial influence. In contrast, China’s digital yuan system emphasizes central bank control and closed-loop usage, making it less compatible with cross-border or open systems. Meanwhile, the EU continues to advance its MiCA regulatory framework, but its technical implementation and market impact remain far behind the first-mover advantage of U.S. dollar–based stablecoins.
Against this backdrop, if U.S. stablecoins succeed in attracting global developers and capital inflows, a practical model of “networked dollarization” may emerge. Without complementary regulatory mechanisms, other nations risk passively accepting a digital financial order anchored to the U.S. dollar.
6. Turning Point or Instrument of Control?
The GENIUS Act is more than just a regulatory framework for stablecoins, it is a strategic declaration by the U.S. to establish dominance in the global digital financial order via on-chain dollars. By using compliance as a tool and network effects as leverage, the U.S. aims to ensure the entire blockchain ecosystem operates within the protective moat of the dollar. This is a modern financial contest shaped by the intersection of regulation and technology, sovereignty and capital.
For investors, this signals a potential revaluation of assets tied to compliant stablecoins. For entrepreneurs, it marks a critical opportunity to realign business models and capitalize on regulatory tailwinds. For observers, it is a declaration on the future distribution of financial sovereignty, an assertion from the U.S. that “the next financial battleground lies on-chain.”
In response to the diverging global monetary policy impacts, crypto asset exchanges must demonstrate heightened adaptability and foresight. As one of the world’s leading digital asset trading platforms, MEXC is empowering users to navigate policy shifts and capture emerging opportunities through its product strengths and strategic ecosystem layout.
Whether through its efficient token listing mechanism, allowing users to invest early in compliant projects and emerging narratives, or through low fees and deep liquidity that enhance trading efficiency and optimize cost structures, MEXC is actively building a new trading environment tailored for the regulatory era. Especially under this new market logic driven by sovereignty and audit-first principles, what platforms offer is no longer just tools—but a bridge to strategic direction.
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