Federal Reserve's Shift and Stablecoin Strategy: $2 Trillion or Entering the Crypto Space, Dollar Hegemony Begins 'On-Chain Revitalization'

The Federal Reserve's attitude towards stablecoins has shifted from 'restriction' to 'embrace', primarily to consolidate the digital dollar hegemony and avoid losing its dominance in global payments. Recent policy adjustments and Waller's statements are part of this strategy.

In July, Trump signed the 'GENIUS Act', which establishes a federal regulatory framework for stablecoins, requiring 100% backing with cash and short-term U.S. Treasury securities. This not only promotes the compliance of stablecoins but also finds a new demand outlet for U.S. Treasuries—Bank of America predicts that within a year, its supply may increase by $25 billion to $75 billion, reaching $2 trillion by 2028. At that time, issuers are expected to hold over $1 trillion in U.S. Treasuries, and Wall Street giants and e-commerce platforms are already positioning themselves.

Stablecoins possess both payment revolution and capital pump attributes: cross-border transfer efficiency far exceeds SWIFT, with transaction volumes in 2023 surpassing the combined totals of Visa and Mastercard; at the same time, they are the main source of liquidity for DeFi and a core channel for traditional funds entering the crypto space. The realization of a $2 trillion scale will inject massive liquidity into BTC and ETH.

The global stablecoin market is dominated by the dollar (99% pegged to the dollar, with over 80% of reserves in U.S. Treasuries), making it difficult for other currencies to compete.

In summary, the 'combination punch' of the Federal Reserve, the Treasury, and the legislation essentially allows the U.S. to extend dollar hegemony through stablecoins and open the gates for institutional funds to enter the crypto space. In the short term, institutional funds entering the market and liquidity expansion are favorable for BTC and ETH; although in the long term, it may subject the crypto space to U.S. policies, the expectation of $2 trillion supports its entry into an institutionally-led growth cycle, allowing investors to position themselves in compliance in advance.