Will the US GENIUS Act Reshape Global Finance and Fight De-Dollarisation?

The US is making bold strides to regulate cryptocurrencies and protect the dollar’s status. During “Crypto Week,” the House passed three key laws:

The GENIUS Act: Allows regulated issuance of stablecoins (cryptocurrencies backed 1:1 by US dollars or Treasury Bills). This aims to boost global trust in the dollar.
The CLARITY Act: Defines rules for digital asset markets to prevent fraud and ensure transparency.
The Anti-CBDC Act: Bans the US Federal Reserve from issuing a central bank digital currency (CBDC), citing privacy concerns.

Why these laws matter:
Countering De-Dollarisation: After the US froze Russian assets in 2022, countries like China and India accelerated gold purchases and explored non-dollar trade. Stablecoins like Tether (now expanding into commodities) offer a workaround to keep the dollar relevant globally.
Economic Strategy: By tying stablecoins to US debt (T-bills), America aims to recycle global dollar demand into its economy. As Tether’s purchase of agro-giant Adecoagro shows, this could revolutionize commodity payments.

Key Distinctions:
Cryptocurrency vs. Stablecoin:
Crypto (e.g., Bitcoin): Decentralized, volatile, and validated by blockchain miners solving cryptographic puzzles.
Stablecoin (e.g., USDT): Centralized, price-stable, and backed by real-world assets like the dollar.
Blockchain’s Role: Enables secure, transparent transactions without central banks.
Challenges Ahead:
Privacy debates around CBDCs, regulatory gaps in emerging markets like India, and the risk of volatile “unbacked” cryptos disrupting financial stability.


Sample Q&As for Competitive Exams
Q1: What is the primary goal of the US GENIUS Act?
Ans: To regulate stablecoins by ensuring they’re fully backed by US dollars or Treasury Bills, reinforcing dollar dominance amid de-dollarisation trends.
Q2: How does de-dollarisation threaten the US economy?
Ans: Countries reducing dollar reserves (e.g., via gold purchases) could weaken the USD’s status as the global reserve currency, limiting US economic leverage.
Q3: Differentiate between cryptocurrency and stablecoin.
Ans: Cryptocurrencies (like Bitcoin) are decentralized and volatile, while stablecoins (like USDT) are asset-backed and price-stable.
Q4: Why did the Anti-CBDC Act ban a US digital currency?
Ans: Due to concerns that a Fed-issued CBDC could enable government surveillance and violate financial privacy.
Q5: How might stablecoins impact India’s economy?
Ans: They could simplify cross-border payments but challenge RBI’s monetary control if unregulated.