The US Senate has recently kicked the can down the road on stablecoin regulation. Again. While politicians bicker over the minutiae, a chilling question hangs in the air: Are we handing China the keys to the future of finance?
So Ripple CEO Brad Garlinghouse is right to sound the alarm. He knows the writing on the wall, and that wall is inscribed in Yuan, not dollars. The GENIUS Act – a bicameral bill seeking to grant the federal government exclusive jurisdiction over stablecoins – didn’t make it. 49-48. A single vote. That’s one individual vote that may end up costing America its status as the world’s financial capital.
Treasury Secretary Scott Bessent is "disappointed." Disappointed? That’s akin to calling the Titanic a ship that suffered a “small hole.” This is more than just a letdown, though it’s a smart growth disaster waiting to happen. Bessent understands what's at stake: dollar dominance. But understanding isn't enough. We need action.
Innovation Stifled, Competition Ignored?
Specifically, stablecoins — cryptocurrencies pegged to fiat currencies such as the dollar — are quickly becoming the new digital dollar. By offering the stability of fiat currency in the otherwise volatile crypto landscape, they allow transactions to be completed faster, cheaper, and more efficiently. In March 2024, stablecoin transaction volumes reached an astounding $1.82 trillion. That’s not a niche market, that’s a financial revolution occurring right in front of us.
Well, as the US continues to dither, other countries are charging aggressively ahead. China is preparing the ground to supplant the dollar’s supremacy. They’re already doing this with their central bank digital currency, the digital Yuan. Now picture a world where more and more of that international trade is getting settled in digital Yuan—thanks to Chinese controlled stablecoin infrastructure. That’s not a dystopian future, that’s reality on the road if we fail to realize the danger and act accordingly.
The unexpected connection here? Think of the 5G rollout. Think back to how the US dawdled, letting Huawei get a head start to assume its now-dominant position. We could be repeating that mistake all over again today, but this time the stakes are much higher. It’s not limited to faster downloads, it’s about who controls the flow of global capital. Not having rules is the same as giving China the rulebook for the fintech internet.
The emotional trigger? Anxiety. Anxiety about falling behind. Anxiety about losing our economic edge. Concern over handing the keys over to a country with radically different political objectives.
State Patchwork: Regulatory Nightmare?
Bessent is right, too, to raise the alarm about these very state-level patches of law and regulation. A hodgepodge of contradictory regulations will stifle advancement and push companies out of the country. Now picture needing to comply with 50 different sets of expensive and burdensome regulations just to issue or operate a stablecoin business. This patchwork of regulations is a compliance nightmare. It has the potential to quickly crush the industry while still in its infancy.
The utility and practical value of stablecoins are obvious. They simplify strategic public/private partnerships, smooth payments, lower transaction costs, and enable cross-border commerce. Traditional finance is taking notice. Stripe and Meta are getting involved. Without a predictable and transparent federal framework, these companies will be needlessly hampered. This will erode their capacity to compete in a globalized world.
Unexpected connection? Imagine back to the early internet days. If each state had its own set of internet protocols, would the internet have become the global phenomenon it is today? Of course not. A collaborative, whole-of-government approach is crucial to supporting and accelerating this innovation and economic growth.
Dollar Dominance: A Missed Opportunity?
While the GENIUS Act was not a perfect bill, it was a move toward a better future. Its failure stands as a missed opportunity to ensure the dollar’s dominance as it enters into the digital age. Rather than embrace modern standards, we’re holding onto a regulatory time machine and letting other nations take the lead.
Believe me, I have experienced as blockchain journalist of this speed. The more we delay, the greater the difficulty in these missed opportunities we will have to make up for. Garlinghouse understands this urgency. He’s not only advocating for Ripple, he’s advocating for the future of American financial leadership.
The emotional trigger? Outrage. Frustration with the political dysfunction that is endangering our longterm economic prosperity. Angst over the short-sightedness of those who don’t see beyond their own backyards.
Unexpected connection? Additionally, this isn’t merely a crypto or financial policy imperative, this is an issue of national security. Strong and vibrant digital economy is key to extending our global leadership. By not getting stablecoins under control, we are eroding our advantage in the geopolitical competition.
Demand action from your elected officials. Explain to them that stablecoin regulation is not an esoteric, techy concern. It’s a front line of national significance. Show them you are paying attention to their every move. Remind them early and often that you want them focused on what’s best for the United States. The story on the future of finance is being written today. Will America be the headline writer, or merely recorded in the footnotes on history? The choice is ours.
