When the U.S. Senate overwhelmingly votes to advance the (GENIUS Stablecoin Act) into substantive legislative stages, the crypto world cheers as the historical moment of 'dollar on-chainization' officially arrives. However, what is truly concerning is that this regulatory reconstruction surrounding stablecoins, along with another seemingly unrelated yet deeply connected crisis—the trust fracture in the U.S. Treasury system—has simultaneously become two 'Damocles' swords' hanging over the global financial system.



Pt.1 The Sword of Stablecoins: Is it a bridge or an invisible currency fragmentation mechanism?


Stablecoins were assigned the role of 'on-chain dollars' from the very beginning. They are the basic trading medium in the DeFi market, an efficiency tool for cross-border payments, and an intermediate anchor point for crypto assets against high volatility.


By the end of 2024, the global stablecoin market value will exceed $200 billion, with dollar-pegged currencies represented by USDT and USDC accounting for nearly 90% of the share. They circulate on the blockchain with extreme efficiency but remain in a compliance gray area.


The passage of the (GENIUS Act) will completely rewrite this reality.


✅ Structural transformation:


  • The threshold for stablecoin issuance will be significantly raised: it will require federal or state-level licenses, meeting reserve, transparency, and anti-money laundering requirements;


  • Prohibit algorithmic stablecoins from circulating without regulation: the market will return from 'free minting' to 'licensed finance';


  • Restrict the market penetration of non-dollar stablecoins: further strengthen the on-chain manifestation of dollar hegemony.



This will be the most far-reaching institutional reconstruction in the history of the crypto industry, signifying not only the true arrival of the compliance era but also marking that the U.S. will extend control over the dollar to the 'digital economic level.'


Mlion.ai's AI regulatory analysis system shows that after the (GENIUS Act) is implemented, it is expected that over 40% of non-mainstream stablecoin projects will be eliminated within a year, further promoting mainstream currencies like USDC and USDT to increase their market share.



🧨 Behind the question: The 'copying dollar' mechanism of stablecoins is accumulating systemic risks.


The allure of stablecoins lies in their equivalent exchange mechanism—when you deposit one dollar, you receive one USDT. But hidden behind this is not a 'replacement' for one dollar but rather a 'mirrored expansion' of one dollar.


Why expansion? Because the dollars received by companies like Tether do not just sit idly in accounts but flow into the U.S. Treasury market or other liquid assets. This means that the same dollar continues to circulate in the 'real world' while also generating purchasing power 'on-chain':


One dollar → One USDT → simultaneously circulating in two systems, forming a 'dual currency supply.'


At a time when the Federal Reserve is still issuing large amounts of debt and struggling to expand its balance sheet, this 'on-chain U.S. Treasury cycle' has formed a seemingly self-consistent yet actually fragile credit loop.


The most typical model is as follows:


  • Tether buys U.S. Treasuries with dollars;


  • The Treasury uses the received dollars to buy USDT again;


  • Tether then uses this fund to buy more U.S. Treasuries;


  • This cycle continues, with Tether's holdings of U.S. Treasuries expanding indefinitely, and the demand for U.S. Treasuries being locked in by virtual capital.



This is not financial innovation; it is structural leverage.


Once market confidence in Tether's asset side wavers, or when the Treasury itself loses its payment ability, this cycle will backfire on the system itself, causing an 'on-chain version of a bank run'—and this is the real detonator of U.S. Treasuries.



Pt.2 The Sword of U.S. Treasuries: The ultimate test of market trust is approaching.


Between 2025 and 2026, the U.S. will face a historic wave of concentrated maturing Treasuries. Federal government, corporate bonds, local bonds, and even repurchase positions on the Federal Reserve's balance sheet will face repricing.


The initial calculation of the Trump administration was to 'create localized recessions to lower interest rates,' but from the market performance in the last two months, he has faced a 'triple whammy of stocks, bonds, and currency':


  • U.S. Treasury yields have instead surged, breaking 5.0% in the short term.


  • U.S. stocks are experiencing sustained volatility.


  • The dollar index has lost its safe-haven halo.



Trump had to slow down his 'strong measures' and temporarily divert market attention with 'tariff buffers' and 'TRUMP Gala crypto promotions.'


But this does not mean that the crisis is averted; rather, it is a deeper policy shift testing period.


Some analyses suggest that Trump may intend to use stablecoins and crypto assets to construct a 'new financing system bypassing the Federal Reserve.' By supporting the circulation of stablecoins, the market indirectly buys U.S. Treasuries, thereby weakening dependence on the central bank.


This sounds full of imagination, but the cold reality is:


  • The $200 billion scale of stablecoins is completely disproportionate to the $36 trillion scale of U.S. Treasuries;


  • The total market value of all cryptocurrencies is not even enough to cover a year's interest expense on U.S. Treasuries;


  • The total amount of BTC held by the U.S. government and enterprises is less than 5% of the total circulating supply.



In other words, while the theory of 'crypto debt rescue' is valid, it requires time to accumulate—it is far from solving the current urgent needs.



🧭 Final Proposition: Is the currency system's cycle nearing its end?


Historically, the Bretton Woods system lasted for 27 years, while the current 'credit currency system' has been operational for 54 years. This round of U.S. Treasury expansion has surpassed the explanatory scope of conventional financial theory and entered the game stage of 'confidence economy.'


When stablecoins become the dollar mapping of digital assets, when U.S. Treasuries become the price anchor of dollar credit, and when the two start to connect a new financial liquidity system on-chain, we must ask:


  • What is supporting the stability of the entire system?


  • When bidirectional circulation amplifies leverage, is there still a clearing mechanism to cover it?



The warning given by Mlion.ai's global macro system model recently is clear: the current fragility of the U.S. Treasury structure is comparable to the eve of the 2007 subprime mortgage crisis, only the asset class has shifted from real estate to 'on-chain credit.'



🧩 Conclusion: Is this the beginning of a new cycle or the final high-altitude game?


Perhaps future history books will note something like this:



'Starting from 2025, stablecoins will move into the legislative core, signs of a U.S. Treasury crisis will begin to show cracks, and a new financial civilization is quietly unfolding between de-dollarization and on-chain compliance.'



Perhaps it will be a metamorphosis, or it may be a head-on collision. Which side will those two high-hanging 'Damocles' swords fall on first? Only time will tell.


What we can do is to foresee the logical clues of this structural change early and use tools to prepare in advance—the policy tracking system, macro risk control model, and AI price warning mechanism of Mlion.ai were born for such cyclical bifurcations.


Disclaimer: The above content is for informational sharing only and does not constitute any investment advice!