When US debts worth 100 billion find a "cryptocurrency takeover", we are witnessing the birth of USD 2.0

Author: White55, Mars Finance

​​1. Legislative process: a dramatic turning point from "near death" to

"resurrection"

From May to June 2025, the U.S. Senate's game over the GENIUS Act (full name: "Guiding and Establishing the Innovation Act of the United States Stable Currency") can be regarded as an epic battle intertwined with politics and finance. The bill, which aims to establish the first federal regulatory framework for the $250 billion stablecoin market, experienced a thrilling counterattack from "programmatic death" to "bipartisan compromise", and finally advanced to the full-scale Senate debate stage with a 68-30 vote. However, behind this victory is the months-long exchange of interests between the two parties, lobbying by industry giants, and moral controversy caused by the Trump family’s “crypto gold mine.”

Timeline review:

• March 2025: Republican Senator Bill Hagerty formally proposed the first draft of the bill, with the goal of establishing a "federal + state" dual-track regulatory system for payment stablecoins.
• May 8: The first procedural vote of the bill failed unexpectedly at 48:49, and the Democrats collectively turned against each other on the grounds of "Trump family conflict of interests."
• May 15: The two parties negotiate urgently to launch an amended bill to remove clauses against Trump's family's crypto business in exchange for partial support from the Democratic Party.
• May 20: The amendment passes the key "Cloture Vote" at 66:32 to clear legislative obstacles.
• June 11: The Senate passes the bill with an overwhelming advantage of 68:30 to enter the final debate and amendment process.

Senate Majority Leader John Thun spoke on Wednesday in favor of the vote to pass the Genius Act. Source: U.S. Senate

The core of this series of twists is that the Republicans cleverly packaged the bill as a strategic tool for "digital hegemony of the dollar", while the Democratic Party has loosened its stance due to concerns about "the regulatory vacuum leading to financial risks." Senate Majority Leader John Thune's lobbying rhetoric is extremely inflammatory: "If the United States does not dominate the stablecoin rules, China will fill the gap with digital yuan!"

​​2. Core terms: regulatory blueprint and "devil details"

The regulatory framework of the GENIUS Act attempts to walk a tightrope between "encouraging innovation" and "preventing risks". Its core clauses can be summarized into the following six pillars:

Dual supervision and issuance threshold​​

Stablecoins with an issuance of over $10 billion are regulated by federal regulation (led by the OCC of the Currency Supervision Agency). State-level regulation is available for less than $10 billion, but state standards must be consistent with federal standards. This design not only appeases state autonomy, but also draws red lines for giants, and is seen as a disguised protection of Circle (USDC) and Tether (USDT).

1:1 Reserves and Assets Quarantine​​

Stable coins are mandatory to be fully mortgaged with high liquidity assets such as cash and short-term US bonds, and reserve assets must be strictly isolated from operating funds. This clause is directly targeting the Terra crash in 2022, but allows the inclusion of "risk assets" such as money market funds in the reserves, and has been criticized as "mine-burning".

​​Tech giants "Tight Hoop"

Non-financial technology companies (such as Meta and Google) must pass the newly established "Stable Coin Certification Review Committee" (SCRC) and meet data privacy and antitrust requirements. This clause is interpreted as a "targeted blow" to Trump's ally Musk (X Platform Stablecoin Program).

Consumer Protection and Bankruptcy Priority

If the issuer goes bankrupt, the stablecoin holder can give priority to redeem the assets, and the reserves are not included in the bankruptcy property. However, the Democrats pointed out that the clause is weaker than the traditional bank's FDIC insurance mechanism and poses a risk of "frozen funds".

Anti-money laundering and transparency

The stablecoin issuer will be included in the jurisdiction of the Bank Confidentiality Law and compulsory fulfillment of KYC, suspicious transaction reports and other obligations. But the loophole is that decentralized exchanges (DEXs) are not restricted, leaving behind a backdoor for illegal capital flows.

President 's Family "Exemption Loop"​​

The bill does not explicitly prohibit members of Congress or relatives of the president from participating in the stablecoin business, and the USD1 stablecoin (a market value of $2 billion) issued by World Liberty Financial (WLF) of the Trump family is compliant. Democratic Senator Warren angrily denounced: "This is giving the green light to Trump's 'crypto corruption'!"

​​3. Controversy Whirlpool: Trump's "crypto gold mine" tear apart from

the two parties

The biggest resistance to the bill is not from policy details, but the Trump family's deep intervention in the crypto industry. Three major controversial points push political game to a climax:

​​USD1 Stablecoin "Legalization Arbitrage"

WLF's USD1 has injected $2 billion into Binance through Abu Dhabi Investment Company, and the Trump family can make an annual profit of more than $80 million through transaction fees. What's even more fatal is that after the bill is passed, USD1 will automatically gain federal recognition and its market value may soar to the 10 billion US dollars level.

The moral crisis of "paid meeting"

Trump has been accused by Democrats of "securitizing state power" by offering holders a "presidential dinner" qualification by selling Meme coins such as TRUMP Coin. Senator Jeff Merkley said bluntly: "This is the most naked power-money transaction in history!"

​​The "revolving door" of legislation and executive power

Republican Senator Hagerty, one of the core drafters of the bill, was revealed to have a political donation connection with the WLF. The Democrats tried to push for an amendment to ban public officials from participating in stablecoin business, but were collectively banned by the Republicans.

Although the two parties reached a compromise on May 15 to remove clauses directly against Trump, Warren and others still launched a "last try" in the Senate, demanding that the Trump family and the WLF be disclosed. This moral offensive and defensive battle is actually the outpost of the 2026 midterm elections.

​​4. Market fluctuations: Compliance dividends and the "Era of Oligarchy"

If the GENIUS Act is finally implemented, it will trigger a structural reshuffle in the stablecoin market:

​​The top players "win"

USDC (Circle) and USDT (Tether) will directly obtain federal licenses because they have long laid out compliant reserves (80% are short-term US Treasury bonds), further squeezing small and medium-sized issuers. Goldman Sachs predicts that the market share of the two may rise from 94% to 98%.

​​Traditional finance "cross-border harvesting"

Institutions such as JPMorgan Chase and Wells Fargo have applied for "limited purpose stablecoin licenses" and plan to erode cryptocurrency exchange shares through on-chain payments business. The provisions of the bill "allowing insurance companies to issue stablecoins" have opened the floodgates for traditional giants.

​​The "anti-drug or poison" of the US debt crisis?​​

The bill requires stablecoin reserves to be dominated by US bonds, which may alleviate the liquidity crisis in the short term, but may intensify "maturity mismatch" in the long term - investors prefer short-term bonds, resulting in a shrinking demand for US bonds in the long term and further deteriorating the fiscal deficit.

​​The Domino Effect of Global Regulation​​

The EU, the UK and Singapore have stated that they will adjust their policies in accordance with the GENIUS Act to form a "dollar stablecoin alliance". The RMB and Japanese yen stablecoins may be squeezed out of the cross-border payment market and reshape the global monetary structure.

​​5. Future Battle: House Game and Trump’s “final ruling”

Even though the Senate has shown green light, the bill still needs to pass the triple level:

House of Representatives "Simplified Customs Clearance"

The Republicans control the House at 220:215, and only a simple majority (218 votes) can pass. But the House version of the STABLE Act has a key difference with the Senate: the former requires regulatory power to be completely federal and prohibits technology companies from issuing stablecoins. The coordination between the two houses may be delayed until August's recess.

The President 's "Trading of Interests"

Although Trump publicly supports the bill, his family interests are deeply bound to the details of the legislation. If Democrats push the "anti-corruption amendment" in the House of Representatives, it may trigger the president's veto and lead to a miscarriage of legislation.

The "Grey Rhino" of Judicial Challenge

The U.S. Constitution’s “Emoluments Clause” prohibits the president from profiting from foreign governments, while 20% of USD1’s users are located in sanctions list countries (Iran, North Korea), which may trigger the Supreme Court’s intervention.

​​6. Conclusion: "Dollar Hegemony 2.0" in the crypto era

The ultimate ambition of the GENIUS Act is by no means just to regulate the market, but to implant the hegemony of the US dollar into the blockchain gene. By bundling US bonds with stablecoins, the United States is building a "digital dollar empire" - every on-chain transaction in the world is invisibly consolidating the reserve position of the US dollar. However, the risk of this gamble is equally huge: if DeFi (decentralized finance) bypasses compliant stablecoins, or China accelerates the internationalization of the digital RMB, the bill may become a "house of cards."

The game of politicians, the lobbying of interest groups, the frenzy of technological revolution—At this fork in history, the ultimate fate of the GENIUS Act will determine who will dominate the financial order of the next decade.