Instead of following the crowd with a central bank digital currency, the U.S. under Trump took a different path.

One that leans on private stablecoins to protect its financial power.

Behind the headlines, the GENIUS Act isn’t just about crypto regulation.

It’s part of a much bigger strategy to keep the dollar at the center of global trade, even as the world shifts to new digital systems.

A geopolitical move aimed at undermining global efforts by countries to finally break free from the dollar’s dominance in transactional exchanges.

The Technical Architecture of the GENIUS Act and Its Role in Perpetuating the Valorization of the U.S. Dollar

The GENIUS Act — formally titled the Guiding and Establishing National Initiative for Uniting Stablecoins — was signed into law in July 2025, marking the first comprehensive federal legislation in the United States dedicated solely to the regulation of fiat-backed stablecoins.

US President Donald Trump displays the GENIUS Act — Source: Getty Images

On the surface, it provides clear legal guidelines, reserve requirements, and transparency mandates for dollar-pegged digital currencies.

But beneath its legalistic framework lies a complex and deliberate attempt to entrench the supremacy of the U.S. dollar in rapidly digitizing global monetary systems that are trying to escape it at all costs.

Crucially, the GENIUS Act represents a paradigm shift in how dollar-backed stablecoins interact with the real U.S. economy. Ashift with direct implications for the valorization of the dollar.

Prior to the Act, most leading stablecoins — such as Tether (USDT) or even Circle’s USDC — operated in a legal gray zone. While they were nominally backed by “dollar-equivalent” reserves, these were often diversified across risk-bearing assets, commercial paper, or offshore bank deposits, especially in the case of USDT. Moreover, these stablecoins were frequently issued from foreign jurisdictions, with reserves held in non-U.S. financial institutions, many of which were neither subject to U.S. monetary policy nor directly integrated into the domestic dollar ecosystem.

As such, these early stablecoins provided synthetic dollar liquidity without directly contributing to net demand for actual dollars or U.S. sovereign debt instruments. They mimicked the dollar’s functionality without reinforcing its strength.

The GENIUS Act changes that calculus entirely.

For the first time, stablecoin issuance is tethered to the mandatory holding of actual U.S. dollars and short-term U.S. Treasury instruments, with reserves required to be fully segregated, transparently disclosed, and custodially located within U.S.-regulated financial institutions.

This legal architecture ensures that every new stablecoin minted under this framework necessitates a corresponding purchase of dollar-denominated high-quality liquid assets.

Source: The GENIUS Act

Issuers are required to provide monthly public attestations of their reserves, verified by independent auditors, to ensure full and ongoing compliance with the backing requirements.

In doing so, the Act turns stablecoins from passive digital reflections of the dollar into active mechanisms of dollar demand.

Each token in circulation now represents not just a digital claim, but a real financial position — anchored in instruments that strengthen the dollar’s value and deepen its integration into global monetary portfolios.

Moreover, the GENIUS Act prohibits rehypothecation of reserves and restricts backing to instruments that are either neutral to or supportive of dollar liquidity.

This effectively channels global demand for dollar-denominated stablecoins into the purchase of U.S. government debt — precisely the instruments that underpin the Federal Reserve’s monetary framework and the Treasury’s fiscal operations.

As these stablecoins gain global traction in remittances, trade settlement, and digital savings, they generate a self-reinforcing cycle of external dollarization through internal dollar consolidation.

This is the hidden genius behind the Act. Where prior stablecoin models externalized the dollar’s utility without deepening its monetary core, the GENIUS Act reconfigures stablecoins as financial conduits that simultaneously globalize the dollar’s use and intensify its domestic anchoring.

It transforms the tokenized dollar from a neutral ledger instrument into a strategic instrument of monetary policy and geopolitical power.

The GENIUS Act also explicitly denies that stablecoins constitute bank liabilities or securities under federal law, thereby removing them from overlapping regulatory regimes that might otherwise stifle their deployment.

This legal carving-out enables a proliferation of compliant stablecoin issuance without reclassifying these instruments in ways that would bring them under more restrictive financial supervision.

It is a strategic move to accelerate stablecoin circulation globally while keeping the system light, modular, and scalable. Crucially, by encouraging private-sector issuance under U.S. jurisdiction, the law provides the dollar with a decentralized but centrally directed presence in global commerce.

The Deep Strategic Rejection of CBDCs: Sovereignty, Control, the Global Monetary Order and The Fed

Donald Trump’s emphatic rejection of a central bank digital currency in the United States is more than political rhetoric.

Upholding Dollar Unipolarity in the Global Monetary Order

It takes into account the geopolitical and monetary implications of entering a global CBDC architecture. One that, if fully developed, would bypass U.S. control and decenter the dollar from its privileged status in global transactions.

In Trump’s worldview, a U.S. CBDC would not simply be a new digital payment tool — it would be a Trojan horse for handing over the levers of monetary power to transnational institutions and foreign central banks.

The current international system of payments is deeply dollar-centric, with SWIFT (Society for Worldwide Interbank Financial Telecommunication) acting as the primary messaging infrastructure for cross-border financial transactions. Though SWIFT is technically headquartered in Belgium and claims political neutrality, it operates under Western-aligned financial rules and, critically, is tightly integrated with U.S. banking infrastructure and sanctions regimes.

In practice, this gives the U.S. Treasury and the Federal Reserve unparalleled visibility into and leverage over global capital flows.

This centralized architecture is the backbone of the dollar’s role as the global reserve and settlement currency. By processing trillions of dollars of transactions daily and denominating global trade, commodities, and sovereign debts in U.S. dollars, the U.S. retains the “exorbitant privilege” described decades ago by French President Valéry Giscard d’Estaing: the ability to print the world’s reserve currency at low cost, borrow in its own money, and exert influence over foreign economies without formal occupation or legal annexation.

The emergence of CBDCs, state-issued programmable digital currencies that allow real-time settlement and peer-to-peer payments across borders, would be extremely disruptive to this domination.

While in theory they provide efficiency, transparency, and innovation, in reality they threaten to reshape the entire global monetary architecture away from the dollar. A network of interoperable CBDCs, particularly under BIS (Bank for International Settlements) or IMF coordination, could build a parallel international financial system where no single currency is dominant, and where settlement no longer needs to be routed through dollar-clearing systems or New York correspondent banks.

Trump is acutely aware of this. In speeches and executive orders, his administration has framed CBDCs not merely as surveillance tools but as vehicles of globalist monetary integration that would erode U.S. economic independence and disable its strategic tools.

In his view, entering such a network would mean participating in a multi-currency, rules-based system, governed by multilateral institutions that could, in time, marginalize the dollar in favor of a basket of CBDCs, or even a synthetic supranational currency unit, akin to the IMF’s Special Drawing Rights (SDRs) but more operational and liquid.

This potential for supranational monetary governance poses a direct threat to U.S. sovereignty. Trump’s ideological framework resists any delegation of core sovereign powers — especially monetary issuance and financial surveillance — to foreign or global bodies.

A U.S. CBDC integrated into a global interoperability framework would necessarily comply with interoperability standards, data-sharing protocols, and privacy regulations defined by multilateral consensus, not by U.S. law. That’s not just an administrative concern, it’s a forfeiture of unilateral power.

From Trump’s strategic lens, the greatest danger lies in replacing SWIFT with a decentralized CBDC settlement layer that is not anchored in the dollar.

Such a network, underpinned by blockchain-based protocols or central bank digital bridges, would allow direct settlement in yuan, euro, or even digital rupees without routing through U.S. clearing systems.

The consequence is geopolitical: countries under U.S. sanctions, or simply seeking autonomy, could bypass dollar rails entirely.

Iran, Russia, and even major trade economies like Brazil or Saudi Arabia could begin settling oil, machinery, or even arms deals in non-dollar CBDCs, depriving the U.S. of visibility, influence, and retaliatory options.

Worse still, such a system could attract allies and neutral states, not because of ideological alignment, but because of efficiency, privacy, or regulatory neutrality. The network effects of such a CBDC architecture would be devastating to U.S. dollar hegemony: once a critical mass of countries uses a CBDC settlement layer, the incentive to remain in a dollar-based clearing system diminishes rapidly.

The dollar’s role in pricing and settling commodities, cross-border bank reserves, and global debt instruments could decline due to technological disintermediation.

Trump’s rejection of a CBDC must be understood in this broader context. It is a geopolitical containment strategy against the rise of a post-dollar global financial system.

Instead, by promoting privately issued, dollar-backed stablecoins, the U.S. under Trump seeks to extend the life of the current system while avoiding entanglement in a new one.

These stablecoins, fully backed by U.S. assets and governed under U.S. law, serve as digital ambassadors of the dollar. They can operate globally, flow into DeFi systems, reach the unbanked, and settle transactions in seconds. But unlike CBDCs, they remain embedded in the American regulatory and banking architecture.

In this sense, stablecoins offer a hybrid solution: technologically decentralized but geopolitically centralized.

They provide digital convenience without ceding control to supranational institutions. They appeal to free-market narratives while reinforcing state power. They mimic the benefits of CBDCs without exposing the United States to the vulnerabilities of multilateral compromise or global oversight.

Thus, Trump’s strategy can be summarized as a final defense of monetary unipolarity. In his worldview, a U.S. CBDC is not a competitive tool but an unnecessary concession to a global framework whose very existence is inimical to American primacy.

The Power Struggle with The Fed

President Trump’s opposition to the development of a U.S. CBDC also stems an open political and ideological battle with the Federal Reserve, a key institution he has long sought to weaken and reform.

In public speeches and campaign rhetoric, Trump has repeatedly described CBDCs as a threat to individual financial freedom, warning that a digital dollar would give the federal government “absolute control over your money,” and even labeling the concept as a form of “tyranny.”

“They could take your money, and you wouldn’t even know it was gone.” — Donald Trump, campaign speech, 2024

Trump has long viewed the Federal Reserve as overly powerful, unaccountable, and hostile to his economic agenda.

Trump’s conflict with the Fed is not new. During his first term, he regularly criticized the central bank for raising interest rates, accused it of undermining growth, and openly questioned its independence. His 2020 nomination of Judy Shelton to the Fed’s Board — though ultimately blocked — signaled his intention to reshape the institution.

Shelton, an outspoken critic of the Fed’s influence, has called for greater political oversight of monetary policy and has challenged the idea that the Fed should operate beyond executive accountability.

Now, as Trump works to dismantle the CBDC framework, Shelton has reemerged as one of the most vocal defenders of his approach. She has characterized the Fed’s recent trajectory as an unacceptable consolidation of technocratic control, arguing that no unelected institution should wield such vast power over the nation’s money.

In recent interviews, Shelton has gone so far as to question whether it is constitutional for a central bank chairman to be effectively insulated from removal, framing the Fed’s independence as a violation of democratic norms.

Through the CBDC ban, Trump is attempting to halt what he sees as the next frontier of central bank overreach.

A digital dollar, especially one issued and managed by the Fed, would mark a dramatic expansion of its authority. Potentially enabling real-time oversight of all transactions, and further marginalizing commercial banks and elected fiscal policymakers.

This executive action marks not just a break with the trajectory of previous administrations but a reassertion of presidential authority over the monetary direction of the country.

So opposing the CBDC plays a double critical role: breaking global efforts to end the dollar’s domination of the global economy, while also stopping the Fed from taking control of the financial system — an institution Trump continues to see as a political and economic adversary.

The Possible Limits of the Stablecoin Strategy: Global Rebellion and the Risk of Monetary Fragmentation

The push by the United States to consolidate its monetary dominance through a stablecoin-first approach, may run into resistance on the global stage.

Many countries, particularly those that have suffered under US financial sanctions and dollar-based exclusionary practices, are accelerating efforts to build an alternative global monetary order.

Russia’s removal from the SWIFT network in the wake of its actions in Ukraine was a watershed moment. It revealed the extent to which the United States and its allies could weaponize control over critical financial infrastructure, turning what was once seen as neutral plumbing into a geopolitical tool.

The same strategy has been applied, to varying degrees, against Iran, Venezuela, and others, reinforcing a growing perception that reliance on US-led financial systems carries unacceptable political risk. In response, major economies are collaborating to construct payment infrastructures and digital currencies that can bypass these chokepoints.

Among the most significant initiatives is mBridge, an international project led by the Bank for International Settlements Innovation Hub with participation from central banks in China, Hong Kong, the United Arab Emirates, and Thailand. mBridge has already reached a minimum viable product phase and is actively piloting real-time cross-border payments using central bank digital currencies. Other major projects include China’s Cross Border Interbank Payment System, or CIPS, which is steadily reducing dependence on SWIFT by processing an increasing volume of yuan-denominated international transactions.

The BRICS countries are also working on a digital payment platform known as BRICS Pay, intended to enable cross-border settlements in local currencies and reduce the need for dollar intermediation. These initiatives are explicitly designed to enable interoperability between sovereign digital currencies, allowing direct bank-to-bank coordination without relying on third-party networks like SWIFT.

As these systems evolve, they are laying the foundation for a parallel global financial order, one that could eventually operate independently of the dollar. This possibility has raised alarm in Washington, where policymakers view dollar dominance as a cornerstone of US geopolitical and economic power.

President Trump, in particular, has described the potential loss of the dollar standard in explicitly militaristic terms. In a July 2025 cabinet meeting, he declared that “losing the dollar standard would be like losing a war, a major world war. We would not be the same country any longer. And we’re not going to let that happen.” The same sentiment was echoed in a 2024 interview, where he warned that the collapse of dollar hegemony would be “the equivalent of losing a war.”

Yet the risk today is not so much defeat in war as self-inflicted isolation.

By refusing to participate in the development of interoperable CBDC systems and halting domestic CBDC research altogether, the United States risks being excluded from the very financial networks that may define the next era of global commerce.

Stablecoins, even if dollar-pegged, are ultimately private instruments and may not satisfy the regulatory, sovereignty, or infrastructure concerns of states seeking alternatives to US-centric systems. While they can temporarily extend the dollar’s reach in certain markets, they are unlikely to form the backbone of a multipolar digital economy.

The divergence in regulatory models is already creating tensions. The US approach differs sharply from those emerging in the European Union, the United Kingdom, and key Asian financial centers such as Singapore and Japan. These jurisdictions are actively shaping cross-border payment frameworks and CBDC pilots with interoperability and legal harmonization in mind. If the United States remains committed to a stablecoin-only path, it could find itself on the outside of these new systems, increasingly dependent on legacy infrastructure like SWIFT, while other nations accelerate into the future.

This scenario echoes a warning issued by Henry Kissinger over a decade ago. He cautioned that the overuse of economic sanctions and financial coercion in a globally interdependent system could provoke mercantilist responses.

Rather than compelling compliance, such tactics could push large economies to prioritize national self-sufficiency and create alternative financial institutions, leading to the fragmentation of the global economic order. What was once a liberalized and integrated global financial system could become a patchwork of rival blocs, each with its own infrastructure, rules, and reserve currencies.

The emergence of CBDCs promises faster, cheaper, and more transparent settlement mechanisms. Unlike the traditional SWIFT system, which often requires multiple intermediaries, foreign exchange market hours, and compliance checks that delay transfers, CBDCs offer near-instant peer-to-peer transactions without the need for Nostro and Vostro accounts. For countries long frustrated by the inefficiencies and political risks of the current system, the appeal of CBDCs is not merely technological but strategic.

In this context, the stablecoin strategy may prove to be a short-term defense of dollar unipolarity at the cost of long-term global integration. If the United States continues to abstain from CBDC collaboration, it may not only lose influence but also find itself locked out of emerging financial ecosystems.

The result would be not only fragmentation but also a structural weakening of the very monetary power the US seeks to preserve.