We assess how stablecoins and blockchains can combine to strengthen the U.S. Treasury bond market after the recent U.S. congressional passage of the GENIUS Act.

In the broader context of stablecoins for asset tokenization worldwide, many governments now seek to enter the global markets for stablecoins and other U.S. digital currencies (USDC) after both chambers of U.S. Congress recently passed the GENIUS Act in June-July 2025. In effect, the GENIUS Act designs and builds out the new supervisory system for stablecoins in favor of greater global demand for U.S. Treasury bonds.

We describe, discuss, and delve into the new global markets for stablecoins and other U.S. digital currencies (USDC) after both chambers of the U.S. Congress recently passed the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act) in June-July 2025. Now stablecoins serve as novel, non-obvious, and useful fiat forms of U.S. Dollar Coins (USDC). Specifically, these new USDC assets differ dramatically from Bitcoin, Ethereum, Ripple, and several other cryptocurrencies in terms of the 3 major characteristics for smart asset tokenization. Specifically, these 3 major characteristics include broader user adoption, fast and efficient medium of exchange, and cross-border payment transfer convenience for USDC stablecoins. With fast, smart, smooth, and efficient asset tokenization, USDC stablecoins operate on the blockchain technology for distributive general ledgers. For practical purposes, we focus on the major macro-financial ripple effects of USDC assets on the mainstream commercial stablecoin issuers, traditional payment gateways, Treasury bonds, and bank deposits in America, Europe, and many other countries worldwide.

 

In effect, the GENIUS Act has created the first-ever federal regulatory system for USDC stablecoins. Walmart, Amazon, and the major American banks, insurers, asset managers, credit card companies, and other financial institutions now seek to launch their own stablecoins. Today, Tether (USDT) serves as the single largest stablecoin with $180 billion market capitalization worldwide. Also, the current issuer of US Dollar Coins (USDC), Circle, serves as the second-largest stablecoin with $70 billion market capitalization around the world. In June 2025, Circle went public on the New York Stock Exchange (NYSE) in response to much Internet fanfare. USDC stablecoins operate on the blockchain technology for distributive general ledgers. The transactional value of stablecoins most often pegs on a one-to-one basis to the U.S. dollar among fiat currencies. This peg differentiates stablecoins from the vast majority of cryptocurrencies such as Bitcoin, Ethereum, Ripple, and several other cryptocurrencies around the world. In recent years, these cryptocurrencies often experience substantial fluctuations in market capitalization due to sudden, volatile, and sometimes even extreme investor sentiments and global market demand and supply factors. In contrast, USDC stablecoins provide an open market alternative option for fast, stable, smooth, and efficient cross-border payments, wire transfers, merchant solutions, and even strategic asset investment streams. Since Circle launched USDC in September 2018, the global stablecoin markets have grown significantly with market capitalization of almost $300 billion to $320 billion today. In recent years, stablecoins have gained further traction as a new common medium of exchange for global stock market investors to transfer money across borders. Today, many global stock and bond market investors prefer to use stablecoins to access key U.S. dollar assets outside America.

 

In the next few years, we would witness a stablecoin gold rush after the recent passage of the GENIUS Act. This new macro-financial legislation creates a new sense of safety around stablecoin user adoption, usage, and proliferation as the American federal system provides proper regulatory oversight with one-to-one support from high-quality U.S. dollar assets. Specifically, these high-quality U.S. dollar assets include both bank deposits and U.S. Treasury bonds under the GENIUS Act. We believe new stablecoin issuers would likely meet the stringent regulatory requirements for long-term capital adequacy and short-term liquidity. Although stablecoins can receive only some indirect protection from the U.S. Federal Deposit Insurance Corporation (FDIC), we believe the future American macro-prudential stress tests would likely cover at least some technical aspects of the USDC and USDT stablecoin markets worldwide. In recent times, the key U.S. regulators tend to clarify that stablecoins are not bank deposits from American consumers. For this reason, stablecoin reserve assets serve as the respective core equity assets of the stablecoin issuers. In this broader context, stablecoin users cannot claim any direct pass-through bank deposit insurance under the GENIUS Act.

 

In terms of both the macro business models and commercial opportunities for the stablecoin issuers, we believe smart asset tokenization would continue to expand in scope over the next couple of decades. This asset tokenization remains in new nascent stages worldwide. In time, broader stablecoin user adoption worldwide might disrupt many of the traditional consumer payment companies such as Visa, Mastercard, American Express, Worldpay, Fiserv, Alipay, WeChat Pay, PayPal, Stripe, Elavon, Adyen, and so forth. Specifically, stablecoins might address most of the costs in cross-border payments. These costs span on-ramp costs, off-ramp costs, and other costs in relation to local regulatory compliance. In practice, however, many traditional payment companies already play a vital role in further facilitating stablecoin transactions for both merchants and consumers worldwide.  

 

In addition, stablecoins can provide a new vital source of global demand for U.S. Treasury bonds. In recent years, for instance, Tether has become one of the top 20 Treasury debt holders worldwide. In this positive light, both Tether and Circle and most other stablecoin issuers might combine to form a formidable source of global demand for U.S. Treasury bonds over the next couple of decades. In time, the ultimate impact of all kinds of stablecoins on Treasury bond demand should depend on the speed, scale, and scope of stablecoin user adoption worldwide. Foreign stock market investors who seek greater U.S. dollar exposure might drive the next few waves of stablecoin capital flows from foreign fiat currencies and bank deposits outside America. Meanwhile, we believe the next few waves of stablecoin capital flows from money market funds would cause a small and minor net impact on Treasury bond demand.

 

Any major migration from U.S. bank deposits to stablecoins would likely require these stablecoins to provide either better cost-benefits or lower payment frictions. In the meantime, the GENIUS Act prohibits stablecoin issuers from paying cash interest, yield, or any form of return on asset tokenization to stablecoin holders. This prohibition applies to both U.S. domestic and foreign stablecoin issuers under the joint supervision of the Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve System (FRS) in America. For these reasons, we would not expect stablecoins to completely crowd out retail payments and bank deposits anytime soon. At best, stablecoins serve as new complements to retail payments and bank deposits, even though stablecoins may eventually affect the global demand for Treasury bonds over the next couple of decades.

 

The GENIUS Act may inevitably unleash economic chaos if different stablecoins trade at dramatically different prices and therefore remain far from a universally acceptable medium of exchange. Some macro-financial economists convey the common concern that stablecoins might become like private bank notes in the American Free Banking Era from 1837 to 1863. Just as many high-quality assets helped back private bank notes for many wildcat banks in the Free Banking Era, the GENIUS Act’s reserve requirements would likely help back new stablecoins. However, stablecoins can combine to be a marginal source of Treasury bond demand worldwide. In this negative light, stablecoins might drive substantially more volatility in the U.S. Treasury bond market, especially if mass redemptions force stablecoin issuers to rapidly liquidate their Treasury bond portfolios in the next major financial crisis. From our fundamental perspective, the GENIUS Act of 2025 is similar to the National Bank Act of 1863 in the same spirit; specifically, the American federal system accelerated an end to the Free Banking Era by requiring all banks to hold Treasury bonds as collateral assets in tandem with private bank notes. In time, we believe the vast majority of new stablecoin issuers would be subject to stringent regulatory requirements for long-term capital adequacy and short-term liquidity. Further, the U.S. macro-prudential stress tests would likely extend to the worst-case scenarios for new stablecoins, USDC and USDT assets, and even cryptocurrencies. In comparison to the U.S. GENIUS Act for stablecoins, many non-U.S. governments have begun to consider interoperable central bank digital currencies (CBDC). In time, these CBDC systems would help facilitate cross-border payments, wire transfers, merchant solutions, and even public welfare transfers. From the Cross-border Inter-bank Payment System (CIPS) in China to the Uniform Payment Interface (UPI) in India, these governments continue to design their own respective CBDC systems to better align with the Society for Worldwide Interbank Financial Telecommunication (SWIFT). Today, SWIFT serves as the long prevalent global financial cooperative system for fast and safe wire transfers, merchant services, and smooth, stable, and efficient cross-border retail payments in recent decades.

 

In the broader context of new stablecoins for asset tokenization worldwide, many governments now seek to enter the global markets for stablecoins and several other digital currencies after both chambers of U.S. Congress recently passed the GENIUS Act in June-July 2025. In recent years, stablecoins have gained traction as a new common medium of exchange for global stock market investors to transfer money across national borders. Today, many global stock market investors prefer to use stablecoins to access U.S. dollar assets outside America. Over the next couple of decades, we believe these new stablecoins, CBDC systems, and other cross-border wire transfer solutions can combine to further build out a fast, stable, smooth, and efficient global financial system with smart asset tokenization. As the U.S. government and its western allies may continue to launch tariffs, tech export restrictions, and other economic sanctions against the major rivals, competitors, and adversaries such as Russia, China, Iran, and North Korea, geopolitical alignment often remakes, reshapes, and reinforces asset market fragmentation in the broader context of financial deglobalization.

 

Over the next couple of decades, we would expect to see a global gold rush for stablecoins after the recent passage of the GENIUS Act in America. In time, this new macro-financial legislation creates a new sense of safety around stablecoin user adoption, usage, and proliferation worldwide.

Over the next couple of decades, we would witness a global gold rush for stablecoins after the recent passage of the GENIUS Act. In effect, this new macro-financial legislation creates a new sense of safety around stablecoin user adoption, usage, and proliferation as the American federal system provides proper regulatory oversight with almost one-to-one support from high-quality U.S. dollar assets. Specifically, these high-quality U.S. dollar assets include both bank deposits and U.S. Treasury bonds under the GENIUS Act. We believe new stablecoin issuers would likely meet the stringent regulatory requirements for long-term capital adequacy and short-term liquidity. The killer use case for stablecoins involves U.S. dollar assets outside America. Many foreign savers, stock market investors, and even institutional investors further use stablecoins to access U.S. dollar assets such as Treasury bonds, Magnificent 7 tech stocks (Meta, Apple, Google, Microsoft, Amazon, Nvidia, and Tesla), and the 3 major passive index funds (BlackRock, State Street, and Vanguard).

 

The classic example is Argentina. In Argentina, many people prefer to hold Circle’s USD Coins (USDC) over Pesos. Across Latin America and Africa, many businesses build on this premise. Also, many lean startups allow retail users to hold U.S. dollar assets through stablecoins in Brazil, Russia, India, China, and South Africa (BRICS). We would expect this global stablecoin user adoption to grow significantly in the next few years. In terms of most conservative estimates, more than 2 billion retail users who live outside America would prefer to hold their entire net worth in U.S. dollar stablecoins by 2045. In addition, cash remittances would be another major use case worldwide because stablecoins serve as novel, non-obvious, and useful digital representations of fiat money currencies. This use case involves faster and better stablecoin wire transfers across national borders. On average, stablecoins would likely help save 7% to 15% of the total costs of cross-border wire transfers. In a new positive light, stablecoins can often provide tremendous value to global stock and bond market investors who keep their eyes on U.S. dollar assets such as U.S. Treasury bonds, Magnificent 7 tech stocks (Meta, Apple, Google, Microsoft, Amazon, Nvidia, and Tesla), and major passive index funds (BlackRock, State Street, and Vanguard) etc. In many different countries, regions, and jurisdictions worldwide, stablecoins provide a fast, smooth, stable, and efficient way for global users to avoid foreign exchange transactions. Today, almost all places accept U.S. dollars, so retail consumers need not convert to the respective local fiat money currencies to make real-time online and offline purchases. Also, many merchants accept stablecoins, USDT and USDC assets, and even cryptocurrencies such as Bitcoin and Ethereum. Today, it is much easier for people to trade U.S. dollars and stablecoins on the same blockchain technology for distributive general ledgers. This native function further underscores the use case for stablecoins in cross-border payments.

 

Stablecoins can often help break down the silos between U.S. dollar assets and non-cash fintech payment instruments. Now these fintech payment instruments span Apple Cash, Starbucks cards, American Express membership rewards, and so on. In combination, these fintech payment instruments provide universal U.S. dollar payment functions, features, and benefits worldwide. Given their low-cost transfer scale, speed, scope, and universal prevalence in many different parts of the world, stablecoins serve as new payment tools with substantially lower costs, fees, and other trade frictions. We believe stablecoins would gain further traction as more global users recognize their low-cost nature, speed, scale, and universal prevalence in many different countries, regions, and jurisdictions worldwide.

 

Today, the same blockchain technology for distributive general ledgers can often significantly enhance fraud protection. In time, the same blockchain technology can help ensure online transparency with proper protocols, security systems, and consensus mechanisms between global users. In effect, these proper protocols and security systems etc combine to perform the back-office safety functions for many consumers and traditional payment companies worldwide.

 

In the broader context of financial globalization, interoperability is the major market niche for stablecoins, blockchains, worldwide payments, CBDC systems, and cryptocurrencies such as Bitcoin and Ethereum. For the foreseeable future, we believe blockchains would probably remain far from universally interoperable. Specially, the Solana blockchain still cannot communicate with the alternative Avalanche and Ethereum blockchains. Since Circle launched USDC on the Ethereum blockchain technology for distributive general ledgers in September 2018, many market players continue to make significant progress on developing interoperable layers of the same blockchain technology. In effect, these layers would allow several different blockchains to communicate in real time. In the meantime, however, the 3 major market players, Axelar, Wormhole, and LayerZero, continue to compete with one another to win the global race for blockchain interoperability. Over the next couple of decades, several major blockchains would probably be able to communicate with each other just as many global ATM networks can communicate with each other these days.

 

However, universal interoperability is only half the battle for blockchains and stablecoins. Stablecoins should be fungible in the sense that every stablecoin becomes acceptable at full value everywhere. For example, one should be able to deposit a USDC token as a U.S. dollar at the local bank. Just as bank deposits and checks became universally acceptable worldwide over several decades, we would witness such fungibility with broader stablecoin user adoption worldwide over the next couple of decades. Again, the GENIUS Act plays a vital role in further promoting both stablecoin fungibility and blockchain interoperability today. The GENIUS Act establishes a new supervisory system for stablecoins, and this new system is similar to the extant supervisory system for banks. Many users still have yet to adopt stablecoins because these users feel safer at local banks. Specifically, the FDIC protects bank deposits up to the $250,000 threshold per depositor today. In effect, this deposit insurance ensures that bank customers know their cash is not at risk even in rare times of bank failures. Hence, the new GENIUS Act requires all U.S. stablecoin issuers to be subject to joint supervision by the OCC, the FDIC, and the Federal Reserve System. Through some state bank agency, the stablecoin issuer has to maintain reserves to back their stablecoins on a one-to-one peg to the U.S. dollar. These U.S. dollar reserves often comprise high-quality liquid core equity assets with proper, complete, and accurate disclosures each month. In effect, this joint inter-agency supervision creates a new sense of safety for broader stablecoin user adoption worldwide.

 

The American regulators almost always play catch-up on new fintech advances. This time is no different. From email payments to online merchant solutions, new fintech firms build out global user authentication systems for faster, smarter, and better security protocols and data encryption networks worldwide. Also, the same situation applies the 4 major auditors, PwC, KPMG, Deloitte, and Ernst & Young (EY) in recent years. Almost none of these 4 major auditors would have audited fintech firms and crypto operators more than one decade ago. Today, all of the 4 major auditors design, run, refine, and also broaden their fintech crypto practices because this market space has become large enough to warrant the mainstream policy lessons. From the Treasury Department to the Federal Reserve System, we believe the American regulatory agencies would seek to accomplish the same best practices for blockchains and stablecoins over the next couple of decades.

 

In the meantime, the crypto-native stablecoins, Tether USDT and Circle USDC, continue to dominate the global markets for stablecoins. In the next few years, we believe this duopoly would continue to represent more than 90% of the global markets for stablecoins in terms of both market capitalization and trade volume. Specifically, Tether would soon issue the U.S. version of its asset tokenization in accordance with the GENIUS Act. This compliance would allow Tether USDT to better compete with Circle USDC in due course. Several mega banks plan to launch new $100 billion market-cap stablecoins for global dollar users to tap into blockchains, fintech payments, and cash remittances worldwide. These banks regard blockchains and stablecoins as new technological advances for further reductions in the total costs of third-party payment operations around the world. Both blockchains and stablecoins can become new levers for these banks to run customer loyalty programs with new cash rewards. In effect, these banks issue new electronic asset tokens to achieve both cost reductions and customer loyalty programs with some proper conversion to either Tether USDT or Circle USDC. Over the next couple of decades, we believe the global markets for stablecoins tend to bifurcate into the Tether-Circle duopoly and the more local asset tokens in many different countries, regions, and jurisdictions worldwide.

 

The GENIUS Act requires some safe high-quality collateral assets to back new stablecoins, and these safe assets include U.S. bank deposits. In the recent U.S. financial history, bank deposits may not be always safe, especially in the recent examples of bank failures such as Silicon Valley Bank, Signature Bank, and the First Republic Bank. In practice, the FDIC insures bank deposits only up to $250,000 per depositor. For both Tether USDT and Circle USDC, the stablecoin customers who deposit their funds at U.S. banks can effectively receive FDIC pass-through deposit insurance up to $250,000. For this reason, these stablecoin funds are like bank deposits with indirect FDIC deposit insurance, even if bank deposits may not be perfectly safe throughout the recent U.S. financial history. Like bank deposits, these stablecoin cash funds are safer than almost any other kinds of high-quality liquid assets in America.

 

Once again, the status quo may bifurcate the global markets for stablecoins with respect to both large banks and small regional community banks in America. Both blockchains and stablecoins further empower large banks to reach more global users, whereas, these fintech advances might pose new threats to some specific small regional community banks. Specifically, these smaller banks fear that stablecoins might siphon low-cost deposits toward the larger market players. For this reason, these smaller banks fully support the GENIUS Act prohibition that stablecoin issuers cannot pay any interest yields, returns, and cash rewards to stablecoin holders. From mega banks to Tether and Circle, however, these larger market players seek to run their new business groups for both blockchains and stablecoins to attract more bank deposits and cash funds from global users.

 

In addition, stablecoins can provide a new vital source of global demand for U.S. Treasury bonds. In recent years, for instance, Tether has become one of the top 20 Treasury debt holders worldwide. In this positive light, both Tether and Circle and most other stablecoin issuers might combine to form a formidable source of global demand for U.S. Treasury bonds over the next couple of decades. In time, the ultimate impact of all kinds of stablecoins on Treasury bond demand should depend on the speed, scale, and scope of stablecoin user adoption worldwide. Foreign stock and bond market investors who seek greater U.S. dollar exposure might drive the next few waves of stablecoin capital flows from foreign fiat currencies and bank deposits outside America. Meanwhile, we believe the next few waves of stablecoin capital flows from money market funds would cause a small and minor net impact on Treasury bond demand.

 

Any major migration from U.S. bank deposits to stablecoins would likely require these stablecoins to provide either better cost-benefits or lower payment frictions. In the meantime, the GENIUS Act prohibits stablecoin issuers from paying cash interest, yield, or any form of return on asset tokenization to stablecoin holders. This prohibition applies to both U.S. domestic and foreign stablecoin issuers under the joint supervision of the Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve System (FRS) in America. For these reasons, we would not expect stablecoins to completely crowd out retail payments and bank deposits anytime soon. At best, stablecoins serve as new complements to retail payments and bank deposits, even though stablecoins may eventually affect the global demand for Treasury bonds over the next couple of decades.

 

For the foreseeable future, the greater global stablecoin footprint would probably boost the global mass demand for safe assets such as U.S. Treasury bonds, the 3 major passive index funds, the Magnificent 7 tech stocks, and so forth. Over the next couple of decades, we would witness higher term premiums in the U.S. Treasury bond market in response to wider stablecoin user adoption worldwide.

The GENIUS Act requires stablecoin issuers to maintain full reserve support of stablecoin-driven payments. In recent times, this key requirement has raised new questions about the major macro-financial policy implications of a greater global stablecoin footprint. As stablecoins become broader, better, and more ubiquitous with exponential user adoption worldwide, this broader stablecoin user adoption can cause a major boost to the global demand for many kinds of safe assets, especially U.S. Treasury bonds. The ultimate impact of stablecoins would likely depend on the speed, scale, scope, and velocity of both stablecoin user adoption and turnover as stablecoins can drive the next exodus of capital from the major traditional payment gateways and trade channels etc. For the foreseeable future, the greater global stablecoin footprint would probably boost the global demand for many safe assets such as U.S. Treasury bonds, the 3 major passive index funds, and the Magnificent 7 tech stocks etc. Over the next couple of decades, we would witness higher term premiums in the U.S. Treasury bond market in response to wider stablecoin user adoption worldwide.

 

In recent times, however, stablecoin user adoption tends to concentrate in the trade volume for crypto assets such as Bitcoin, Ethereum, Ripple, and several other cryptocurrencies. We have yet to see another major uptake in the trade volume for consumer payments. In the next few years, we would expect to see broader stablecoin user adoption with both regulatory maturity and technological advancement. In principle, stablecoins provide consumers new incentives over traditional fiat money payments primarily through merchant rewards, fewer trade frictions, and several other customer loyalty programs. Nonetheless, we would witness substantially more fierce competition between stablecoin issuers and credit card merchants because they already provide similar non-cash benefits with special gift cards and membership rewards. For this reason, these extant economic moats and competitive advantages for credit card merchants tend to limit the unique valuation proposition for stablecoins. At any rate, any significant increase in stablecoin user adoption would result in another major boost to the global demand for safe assets, especially U.S. Treasury bonds and index funds.

 

For a given level of total trade volume, faster stablecoin turnover velocity would likely require substantially fewer stablecoins in circulation. As a result, the fewer stablecoins would lead to a lesser boost to the global demand for safe assets. Some recent studies show that the current trade volume in USDC as a portion of total stablecoin supply tends to be relatively low. Whether this low trade volume warrants large reserves for stablecoins remains an open question. At any pace, however, it is reasonable for us to infer that any major rise in stablecoin turnover can cause another substantial boost to the global demand for safe assets such as U.S. Treasury bonds and passive index funds when the primary user case for stablecoins shifts toward consumer payments outside the crypto space. In time, the new marginal consumer payments would most likely comprise U.S. Treasury bonds, bank deposits, money market funds, cash funds, and foreign choices for U.S. dollar assets.

 

Although stablecoins and money market funds tend to be close substitutes, money market funds pay some interest returns to fund holders, whereas, stablecoins cannot pay any interest returns to coin holders. At the same time, both market options receive no direct deposit insurance coverage, receive only complete support from short-maturity dollar assets, and serve as the new online representations of fiat money currencies via smart asset tokenization. Over the next few years, we would not expect stablecoins to dramatically pull away the massive global demand for money market funds. However, stablecoins can potentially provide new non-cash rewards and some other incentives for broader global stablecoin user adoption in order to reduce the interest yield advantage of money market funds.

 

By comparison, bank deposits receive direct deposit insurance up to $250,000 per depositor and further provide small but significant and informative interest returns in due course. Over the next couple of decades, we would expect both USDC and USDT stablecoins to shift significantly toward consumer payments. With smart asset tokenization, these stablecoins serve as not only a formidable substitute for foreign exchange but also a new medium of exchange. In time, these stablecoins may drive a massive migration from bank deposits worldwide as the non-cash customer loyalty rewards from stablecoins start to outweigh the relatively small interest returns on bank deposits. If massive capital flows cause any major transfer of ownership from bank deposits to stablecoins, this next-gen large-scale deposit migration might result in negative macro-financial policy implications for domestic credit intermediation. For these reasons, we would witness stringent and rigorous regulatory requirements for long-term capital adequacy and short-term liquidity in the stablecoin space. Also, we would expect the American regulatory agencies, especially the Treasury Department and the Federal Reserve System, to contemplate the long-run worst-case scenarios for stablecoins as part of the current macro-prudential stress tests. In time, these worst-case scenarios for stablecoins can hence help shine new light on any potential massive bank deposit migration over the next couple of decades.

 

In the next few years, we would expect to see further foreign investment choices via stablecoins. Foreign investors who seek to diversify their U.S. dollar portfolios can purchase safe assets such as U.S. Treasury bonds and passive index funds etc through stablecoins. This further foreign investment demand would boost the global demand for safe assets by the approximate amount of total trade volume for stablecoins in due course. In this positive light, stablecoins may help unlock a significant pool of previously inaccessible foreign capital. In effect, stablecoins can help foreign stock and bond market investors minimize any potential foreign exchange costs, capital flow constraints, and other immediate trade frictions.

 

Broader stablecoin user adoption may further affect the endogenous safe-asset issuance decisions with respect to the global safe-asset supply. Treasury bond issuers can accommodate the higher global demand for safe assets through higher prices, lower short-term interest rates, front-end supply hikes, or some combination of these supply factors. Some recent studies show that the major commercial paper issuers have begun to expand their global supply to meet stablecoin-driven demand for safe assets. Despite recent minimal movements in commercial paper interest rates, the Treasury Department might seek to meet new stablecoin-driven demand for safe assets by further skewing Treasury bond issuance toward the short end of the new term structure of bond maturity dates. As a result, the Treasury Department might be able to better smooth out Treasury debt cost variability with reasonably higher term premiums. In turn, this Treasury debt management practice plays a vital role in the broader context of vertiginous U.S. sovereign debt burdens and fiscal deficits in recent years.

 

We further describe, discuss, and delve into the new macro business models and market niche opportunities for stablecoin issuers. In the next couple of decades, the commercial opportunities for stablecoin issuers can grow exponentially as smart asset tokens, blockchains, and stablecoins combine to outpace traditional consumer payments, cash remittances, wire transfers, and other cross-border trade transactions via interoperable CBDC security systems, proper protocols, and global user authentication mechanisms.

Today, stablecoin issuers engage in 2 major business models. First, stablecoin issuers engage in the outright creation and issuance of stablecoins worldwide. Second, stablecoin issuers create white-label stablecoins to help further facilitate consumer payments, wire transfers, cash remittances, and other cross-border trade transactions. Over the next couple of decades, the new business model opportunities for stablecoin issuers can grow exponentially as asset tokens, blockchains, and stablecoins combine to outpace traditional consumer payments, cash remittances, wire transfers, and some other cross-border trade transactions via interoperable CBDC security systems, proper protocols, and global user authentication mechanisms.

 

In the first business model for outright stablecoin issuance, each issuer mints its own stablecoin. Customers deliver dollars to the stablecoin issuer, and this issuer creates the equivalent dollar value of stablecoins and then delivers them to these customers. From minting new stablecoins, the proceeds flow into high-quality, liquid, and safe assets such as U.S. Treasury bonds, passive index funds, and Magnificent 7 tech stocks etc. Through this rare unique creation of stablecoins, there are no market, credit, and interest rate risks in relation to these stablecoins. From U.S. Treasury bonds and Treasury repos to bank deposits and index funds, such safe assets serve as the dollar reserves for stablecoins available at the systemically important financial institutions (SIFI). These stablecoin issuers can often liquidate such safe assets to provide U.S. dollars to customers who wish to sell their stablecoins at almost one-to-one stablecoin redemption value. Today, Tether USDT and Circle USDC are the 2 largest direct stablecoin issuers with total market capitalization of almost $250 billion to $270 billion. When we include all the other stablecoins, the global stablecoin markets have grown exponentially to $300 billion to $320 billion in recent years.

 

In the second business model for white-label stablecoin issuance, each issuer mints and redeems stablecoins on behalf of some strategic partner who delivers dollars from customers to the issuer for such stablecoin creation. In time, this strategic partner delivers stablecoins to customers. In this second alternative business model, the basic reserve structure often resembles the same reserve structure of the first outright issuance model. For white-label stablecoins, the largest strategic partners now include U.S. Global Dollar (USDG) from Paxos Digital Singapore, Kraken, PayPal, Coinbase, Robinhood, and so forth on behalf of the Global Dollar Network.

 

Stablecoin issuers make money by earning higher returns on their safe assets than they pay out in expenses to commercial partners. These stablecoin issuers collect interest income streams on their reserves. Under the GENIUS Act, it is not permissible for stablecoin issuers to pay interest income streams to coin holders. However, stablecoin issuers can often remit some reserve income streams as cash distribution expenses to strategic partners who can then choose to disgorge cash rewards to customers. Circle pays cash distribution expenses to Coinbase. In turn, Coinbase provides cash rewards to USDC holders on the same platform. Today, several different stablecoins run different business models of reserve income streams for strategic partners who wish to provide near-cash rewards, loyalty programs, special membership gifts, and other incentives to customers. Specifically, Paxos USDG pays out almost all of the reserve income streams to its strategic partners minus some small management fees for Paxos. In contrast, Tether USDT retains almost all reserve income streams. In the meantime, Circle USDC strategically persists, pivots, and perseveres between the 2 polar extreme business models. In recent years, Circle USDC distributes no more than 60% of its reserve income streams to some specific strategic partners. In turn, these strategic partners can often choose to provide customers with some to almost all of the reserve returns in the common forms of near-cash rewards, special loyalty programs, membership gifts, and some other incentives. Over the next couple of decades, we believe Tether USDT, Circle USDC, and several other stablecoins can become the most natural way for some specific strategic partners to pay for real-world assets on blockchains.

 

Although the GENIUS Act now establishes the new macro-financial legislation and regulatory baseline in support of wider stablecoin user adoption worldwide, we believe the vast majority of traditional payment companies continue to play a vital role in cash distribution, fraud prevention, and regulatory compliance. Today, it is relatively simple and straight-forward for global stock and bond investors to trade U.S. dollar assets as real-world asset tokens on blockchains, and the long prevalent mainstream blockchains involve relatively low headline costs in stark contrast to the higher on-ramp costs, off-ramp costs, foreign exchange fees, and regulatory compliance costs in relation to Anti-Money Laundering (AML) and Know-Your-Customer (KYC) security systems, proper protocols, and global user authentication mechanisms. Further, stablecoins can help enhance the current worldwide financial transfer systems such as the long prevalent American-driven SWIFT, the Cross-border Inter-bank Payment System (CIPS) in China, and the Uniform Payment Interface (UPI) in India, among several other transfer systems. From Visa and Mastercard to American Express, the key credit card companies continue to play a vital role in further facilitating payments and many other trade transactions for stablecoins. In effect, these key credit card companies further build on their strategic partnerships with Coinbase to ensure the safe settlement of crypto payments on blockchains. Over the next couple of years, each of these major credit card companies seeks to settle more than $1 billion in stablecoins. However, the significant distribution hurdles for widespread acceptance would likely limit global stablecoin user adoption for crypto payments and many other trade transactions outside America and Europe. In many East Asian countries such as China, India, Indonesia, Malaysia, and the Philippines, key credit card payments have not taken root in the real economy there. Nonetheless, we would expect to see broader stablecoin user adoption worldwide over the next couple of decades because significant network effects remake, reshape, and reinforce the current global credit card ecosystem across many different countries, regions, and jurisdictions worldwide.

 

Both stablecoins and central bank digital currencies (CBDC) rely on smart asset tokenization and the novel blockchain technology for distributive general ledgers. These fintech innovations share many common characteristics. Specifically, the major disruptive innovations involve faster and cheaper trade transactions, close substitutes for fiat money currencies, and implicit liquid collateral assets for safe financial support. However, stablecoins differ dramatically from CBDCs in one key aspect of the global financial system: private entities issue stablecoins on the blockchain technology for distributive general ledgers, whereas, central banks issue, control, and operate CBDCs on the same globally interoperable blockchain technology for distributive general ledgers.

 

Throughout global human history, central banks receive, collect, and monopolize seigniorage taxes on their fiat money creation. Over the next couple of decades, however, stablecoins may share some of the seigniorage taxes with both users and merchants through operational cost economies in the common forms of cash rewards, special loyalty programs, membership gifts, and many other incentives. In recent years, many commercial strategic partners continue to retain an active interest in broader stablecoin user adoption worldwide because these near-cash incentives can combine to form formidable economic moats, blue-ocean market niche opportunities, and competitive advantages for these strategic partners to attract new stablecoin-driven customers who would otherwise prefer not to make purchases on the blockchain technology. By comparison, central banks receive, collect, and even monopolize seigniorage taxes on their solo fiat money creation. Since the Global Financial Crisis of 2008-2009, many central banks have sought to leverage large-scale asset purchases of both Treasury bonds and mortgage securities to provide short-term liquidity in support of the wider global economy. Apart from these large-scale asset purchases, the other 2 major unconventional monetary policy tools span negative interest rates and forward guidance inflation expectations. In combination, these new monetary policy tools may become part of the central bank’s mainstream monetary policy toolkit in time. In effect, these new monetary policy tools further complicate both seigniorage taxes and CBDCs in global fiat money creation worldwide. To the extent that stablecoins can cause new negative ripple effects on the macro mandate via lesser bank intermediation, stablecoins may lead to more profound global macro-financial policy implications than CBDCs do in practice over the next couple of decades.

 

Stablecoin issuers buy safe assets such as U.S. Treasury bonds, index funds, and Magnificent 7 tech stocks etc to shore up their liquid near-cash reserves. Also, these stablecoin issuers sell these safe assets to redeem stablecoins in due course. This process can potentially amplify price volatility in the safe assets, especially in rare times of both low liquidity and demand-supply imbalances. Hence, we would expect the next major waves of stablecoin capital flows to cause price pressures specifically in the U.S. Treasury bond market. In practice, massive stablecoin redemption might cause a greater adverse impact on the U.S. Treasury bond market than stablecoin creation does in rare times of severe macro-financial stress conditions. Alternatively, CBDC creation and redemption would simply alter the relative mix and composition of central bank liabilities with no adverse impact on the relative mix and composition of central bank assets. For this reason, it is not likely for CBDCs to further amplify Treasury bond price pressures and extreme asset price fluctuations in the short run. In this new light, CBDCs tend to be macro-financially safer, less risky, and more cost-effective than stablecoins in terms of both fiat money creation and redemption.

 

In addition to the GENIUS Act of June-July 2025, U.S. Congress passed another 2 major pieces of crypto legislation. These 2 major pieces of crypto legislation are the Digital Asset Market Clarity Act and the Anti-CBDC Surveillance State Act. Both pieces help prevent the Federal Reserve System from issuing CBDCs directly to American consumers with no explicit congressional authorization. Even though we believe the global financial system can benefit substantially from interoperable CBDC systems via the American-driven SWIFT, CIPS in China, UPI in India, and so forth over the next couple of decades, the key central banks may not design these CBDC systems for the foreseeable future. For this reason, today stablecoins continue to serve as the low-cost, safe, and feasible medium of exchange for cross-border payments, wire transfers, cash remittances, and many other trade transactions worldwide.

 

 

With U.S. fintech patent approval, accreditation, and protection for 20 years, our AYA fintech network platform provides proprietary alpha stock signals and personal finance tools for stock market investors worldwide.

We build, design, and delve into our new and non-obvious proprietary algorithmic system for smart asset return prediction and fintech network platform automation. Unlike our fintech rivals and competitors who chose to keep their proprietary algorithms in a black box, we open the black box by providing the free and complete disclosure of our U.S. fintech patent publication. In this rare unique fashion, we help stock market investors ferret out informative alpha stock signals in order to enrich their own stock market investment portfolios. With no need to crunch data over an extensive period of time, our freemium members pick and choose their own alpha stock signals for profitable investment opportunities in the U.S. stock market.

Smart investors can consult our proprietary alpha stock signals to ferret out rare opportunities for transient stock market undervaluation. Our analytic reports help many stock market investors better understand global macro trends in trade, finance, technology, and so forth. Most investors can combine our proprietary alpha stock signals with broader and deeper macro financial knowledge to win in the stock market.

Through our proprietary alpha stock signals and personal finance tools, we can help stock market investors achieve their near-term and longer-term financial goals. High-quality stock market investment decisions can help investors attain the near-term goals of buying a smartphone, a car, a house, good health care, and many more. Also, these high-quality stock market investment decisions can further help investors attain the longer-term goals of saving for travel, passive income, retirement, self-employment, and college education for children. Our AYA fintech network platform empowers stock market investors through better social integration, education, and technology.

 

Andy Yeh

Online brief biography of Andy Yeh

https://ayafintech.network/blog/a-brief-biography-of-andy-yeh/

Co-Chair

AYA fintech network platform

Brass Ring International Density Enterprise ©

 

 

We assess the current global race toward artificial general intelligence (AGI) between both the U.S. and China.

Podcast: https://bit.ly/4cGMCgi

Article: https://ayafintech.network/blog/we-assess-the-current-global-race-toward-artificial-general-intelligence-agi-between-both-china-and-america/

 

The current AI-driven stock market rally may not be a major asset bubble yet in global human history.

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President Trump poses new threats to Fed Chair monetary policy independence again.

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American exceptionalism often turns out to be the heuristic rule of thumb for better economic growth, low and stable inflation, full employment, and macro-financial stability.

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In the broader modern monetary policy context, central banks learn to weigh the trade-offs between output and inflation expectations and macro-financial stress conditions.

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Is higher stock market concentration good or bad for Corporate America?

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The global cloud infrastructure helps accelerate the next high-tech revolutions in electric vehicles (EV), virtual reality (VR) headsets, artificial intelligence (AI) online services, and the metaverse.

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How can generative AI tools and LLMs help enhance human productivity?

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Article: https://ayafintech.network/blog/generative-artificial-intelligence-uses-large-language-models-and-content-generation-tools-to-enhance-human-productivity/

 

Both BYD and Tesla have become serious global manufacturers of electric vehicles (EV) worldwide.

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Article: https://ayafintech.network/blog/mainstream-technological-advances-in-the-global-auto-industry/

 

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Podcast: https://bit.ly/3Vt1Sng

Article: https://ayafintech.network/blog/gen-ai-fundamental-analysis-of-meta-platforms-meta/

 

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Podcast: https://bit.ly/3Kh8Qta

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Podcast: https://bit.ly/4nRGLqy

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Podcast: https://bit.ly/46biKoG

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Podcast: https://bit.ly/4q2VfG4

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Podcast: https://bit.ly/470BoPm

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Stock Synopsis: With a new Python program, we use, adapt, apply, and leverage each of the mainstream Gemini Gen AI models to conduct this comprehensive fundamental analysis of Salesforce (U.S. stock symbol: $CRM).

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Stock Synopsis: With a new Python program, we use, adapt, apply, and leverage each of the mainstream Gemini Gen AI models to conduct this comprehensive fundamental analysis of Texas Instruments (U.S. stock symbol: $TXN).

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Industry Analysis

AYA ebook hyperlink: https://bit.ly/4hxvrwy

AYA ebook length: 283 pages (21 chapters and 122,241 words).

 

Stock Synopses for the Top 20 Tech Titans

AYA ebook hyperlink: https://bit.ly/3VR7Ka5

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Modern management macro themes, insights, and worldviews

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Economic science macro themes, insights, and worldviews

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