AYA analytic report on macro-financial policy developments July 2027

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Our AYA macro analytic report shines light on the current global macro-financial policy developments and their policy implications for stock market investments in recent years.

Our AYA macro analytic report shines new light on many of the major recent global macro-financial policy developments in America, Europe, and most other countries worldwide. As of Summer-Fall 2027, we now describe, discuss, and delve into the global market for stablecoins after the U.S. Congress recently passed the GENIUS Act in June-July 2025. Today, stablecoins serve as novel, non-obvious, and useful fiat forms of U.S. digital currencies (USDC). Specifically, these new USDC assets differ dramatically from Bitcoin, Ethereum, Ripple, and key other cryptocurrencies in terms of several major characteristics. These major characteristics span broader user adoption, fast and efficient medium of exchange, and cross-border payment transfer convenience for USDC stablecoins. We focus on the main macro-financial ripple effects of USDC assets on stablecoin issuers with smooth asset tokenization, traditional payment gateways, Treasury bonds, and bank deposits.

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.

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