The "Beautiful America Act" is about to be passed, aiming to vigorously develop stablecoins and promote interest rate cuts by The Federal Reserve (FED).

Author: Mask, W 3 C DAO

A financial experiment born from a $36 trillion national debt crisis is attempting to transform the crypto world into the “white knight” for U.S. Treasury bonds, while the global monetary system is quietly being reshaped.

Inside the U.S. Capitol, a piece of legislation called the “Beautiful Act” is being pushed forward vigorously. Deutsche Bank’s latest report characterizes it as the “Pennsylvania Plan” for the U.S. to cope with massive debt—by mandating stablecoin purchases of U.S. Treasury bonds and incorporating digital dollars into the national debt financing system.

This bill forms a policy combination with the “GENIUS Act”, which has already mandated that all USD stablecoins must be 100% backed by cash, US Treasury bonds, or bank deposits. It marks a fundamental shift in the regulation of stablecoins. The bill requires stablecoin issuers to hold reserves in a 1:1 ratio with USD or high liquidity assets (such as short-term US Treasury bonds) and prohibits algorithmic stablecoins while establishing a dual regulatory framework at both federal and state levels. Its goals are clear:

Relieving pressure on US debt: Mandatory allocation of stablecoin reserve assets to the US debt market. According to the US Treasury’s forecast, by 2028, the global stablecoin market value will reach $2 trillion, with $1.6 trillion flowing into US debt, providing new financing channels for the US fiscal deficit.

Consolidating Dollar Hegemony: Currently, 95% of stablecoins are pegged to the dollar, and the legislation creates a closed loop of “Dollar → Stablecoin → Global Payments → Return of U.S. Treasury Bonds,” reinforcing the dollar’s “on-chain minting authority” in the digital economy.

Promoting interest rate cut expectations: A Deutsche Bank report indicates that the passage of the bill pressures the Federal Reserve to cut interest rates to reduce the financing costs of U.S. Treasuries, while also guiding the dollar to soften, enhancing the competitiveness of U.S. exports.

The US debt dam, stablecoins become policy tools

The total federal debt of the United States has exceeded 36 trillion dollars, with principal and interest repayments reaching as high as 9 trillion dollars by 2025. In the face of this “debt lake”, the Trump administration urgently needs to open new financing channels. Stablecoins, a financial innovation that once floated on the fringes of regulation, unexpectedly became a lifeline for the White House.

According to signals from the Boston Money Market Fund Seminar, stablecoins are being cultivated as “new buyers” in the U.S. Treasury market. Yie-Hsin Hung, CEO of State Street Global Advisors, stated: “Stablecoins are creating substantial new demand for the Treasury market.”

Numbers speak for themselves: the current total market value of stablecoins is 256 billion USD, of which approximately 80% is allocated to U.S. Treasury bills or repurchase agreements, amounting to about 200 billion USD. Although it accounts for less than 2% of the U.S. Treasury market, its growth rate has attracted the attention of traditional financial institutions.

Citibank predicts that by 2030 the market value of stablecoins will reach between $1.6 trillion and $3.7 trillion, at which point the amount of U.S. Treasury bonds held by issuers will exceed $1.2 trillion. This scale is sufficient to rank among the largest holders of U.S. Treasury bonds.

Thus, stablecoins have become a new tool for the internationalization of the US dollar. For example, leading stablecoins like USDT and USDC hold nearly $200 billion in US Treasury bonds, accounting for 0.5% of US national debt. If the scale expands to $2 trillion (with 80% allocated to US Treasury bonds), the holdings would exceed that of any single country. This mechanism may:

Distorted financial markets: A surge in short-term demand for U.S. Treasuries has suppressed yields, steepening the yield curve and weakening the effectiveness of traditional monetary policy.

Weaken capital controls in emerging markets: The cross-border flow of stablecoins bypasses traditional banking systems, undermining exchange rate intervention capabilities (such as the crisis triggered by capital flight in Sri Lanka in 2022).

The bill scalpel, financial engineering for regulatory arbitrage

The “Beautiful Big Law” and the “GENIUS Act” form a sophisticated policy combination. The latter serves as a regulatory framework, mandating stablecoins to act as “buyers of last resort” for U.S. Treasury bonds; the former provides issuance incentives, creating a complete closed loop.

The core design of the bill is filled with political wisdom: when users purchase stablecoins with 1 dollar, issuers must use that 1 dollar to buy U.S. Treasury bonds. This not only meets compliance requirements but also achieves fiscal financing goals. Tether, as the largest stablecoin issuer, net purchased 33.1 billion dollars in U.S. Treasury bonds in 2024, becoming the seventh largest buyer of U.S. Treasury bonds globally.

The regulatory tiered system further reveals the intention to support oligopolies: stablecoins with a market capitalization exceeding $10 billion are directly regulated by the federal government, while smaller players are handed over to state-level agencies. This design accelerates market concentration, with Tether (USDT) and Circle (USDC) currently occupying over 70% market share.

The bill also includes exclusivity clauses: it prohibits non-U.S. dollar stablecoins from circulating in the U.S. unless they are subject to equivalent regulation. This both consolidates the dollar’s hegemony and clears the way for the USD 1 stablecoin supported by the Trump family—this coin has received a $2 billion investment commitment from the Abu Dhabi investment company MGX.

Debt shifting chain, the rescue mission of stablecoins

In the second half of 2025, the U.S. Treasury bond market will see an increase in supply of $1 trillion. In the face of this surge, stablecoin issuers are expected to play a significant role. Mark Cabana, head of U.S. interest rate strategy at Bank of America, noted: “If the Treasury shifts to short-term debt financing, the demand increase brought by stablecoins will provide policy space for the Treasury Secretary.”

The mechanism design is truly ingenious:

For every 1 dollar stablecoin issued, 1 dollar of short-term U.S. Treasury bonds must be purchased, directly creating a financing channel.

The growing demand for stablecoins has transformed into institutional purchasing power, reducing uncertainty in government financing.

Publishers are forced to continuously increase their reserve assets, creating a self-reinforcing demand loop.

Adam Ackermann, portfolio manager at fintech company Paxos, revealed that several top international banks are in discussions about stablecoin collaboration, inquiring “how to launch a stablecoin solution within eight weeks.” The industry’s heat has reached its peak.

But the devil is in the details: stablecoins are primarily anchored to short-term U.S. Treasury bonds, which do not provide substantial help to the supply and demand imbalance of long-term U.S. Treasury bonds. Moreover, the current scale of stablecoins remains insignificant compared to U.S. Treasury interest expenditures—global stablecoin total scale is 232 billion dollars, while annual interest on U.S. Treasury bonds exceeds 1 trillion dollars.

The new hegemony of the US dollar, the rise of on-chain colonialism

The deep strategy of the bill lies in the digital upgrade of dollar hegemony. 95% of stablecoins globally are pegged to the dollar, creating a “shadow dollar network” outside the traditional banking system.

Small and medium-sized enterprises in Southeast Asia, Africa, and other regions use USDT for cross-border remittances, bypassing the SWIFT system, resulting in a reduction of transaction costs by over 70%. This “informal dollarization” accelerates the penetration of the dollar in emerging markets.

The deeper impact lies in the paradigm revolution of the international clearing system:

Traditional dollar settlement relies on interbank networks such as SWIFT.

Stablecoins are embedded in various distributed payment systems in the form of “on-chain dollars.”

The dollar settlement capability breaks through the boundaries of traditional financial institutions, achieving an upgrade in “digital hegemony”.

The EU is clearly aware of the threats. Its MiCA regulations restrict the daily payment functions of non-euro stablecoins and impose issuance bans on large-scale stablecoins. The European Central Bank is accelerating the advancement of the digital euro, but progress is slow.

Hong Kong adopts a differentiated strategy: while establishing a stablecoin licensing system, it plans to introduce a dual licensing system for over-the-counter trading and custodial services. The Monetary Authority also plans to issue guidelines for the tokenization of real-world assets (RWA) to promote the on-chain of traditional assets such as bonds and real estate.

Risk transmission network, countdown of a time bomb

The bill lays down three structural risks:

First layer: US Treasury Bonds - Stablecoin death spiral. If users collectively redeem USDT, Tether needs to sell US Treasury Bonds for cash → US Treasury Bond prices plummet → Other stablecoin reserves depreciate → Total collapse. In 2022, USDT briefly depegged due to market panic, and similar events in the future may impact the US Treasury market due to the scale of the situation.

Second layer: The risks of decentralized finance are magnified. After stablecoins flow into the DeFi ecosystem, operations such as liquidity mining and lending staking leverage them layer by layer. The restaking mechanism allows assets to be repeatedly staked across different protocols, resulting in a geometric increase in risk. Once the value of the underlying assets plummets, it could trigger a chain reaction of liquidations.

The third layer: loss of independence in monetary policy. The Deutsche Bank report points out that the bill will “pressure the Federal Reserve to cut interest rates.” The Trump administration indirectly obtained “printing rights” through stablecoins, potentially undermining the independence of the Federal Reserve — Powell has recently rejected political pressure, hinting that a rate cut in July is unlikely.

What’s more concerning is that the U.S. debt-to-GDP ratio has exceeded 100%, and the credit risk of U.S. Treasury bonds is rising. If U.S. Treasury yields continue to be inverted or there are expectations of default, the safe-haven attributes of stablecoins will be at great risk.

Global new chess game, on-chain reconstruction of economic order

In response to the actions of the United States, the world is forming three major camps:

Regulatory Integration Camp: Canadian banking regulators have announced their readiness to regulate stablecoins, with a framework being developed. This echoes the regulatory trends in the United States, forming a North American collaborative situation. Coinbase will launch American-style perpetual contracts in July, settling funding rates with stablecoins.

Innovative Defense Camp: Hong Kong and Singapore present a divergence in regulatory paths. Hong Kong adopts a prudent tightening approach, positioning stablecoins as “virtual bank substitutes”; Singapore, on the other hand, implements a “stablecoin sandbox” allowing experimental issuance. This difference may lead to regulatory arbitrage, weakening the overall competitiveness of Asia.

Alternative camp: People in high-inflation countries use stablecoins as a “hedge asset,” weakening the circulation of local currency and the effectiveness of central bank monetary policy. These countries may accelerate the development of local stablecoins or multilateral digital currency bridge projects, but face severe trade challenges.

And the international system will also undergo changes: from unipolar to a “hybrid architecture”, the current reform plan presents three paths:

Diversified Currency Alliance (highest probability): The US dollar, euro, and renminbi form a tripolar reserve currency, supplemented by regional settlement systems (such as ASEAN multilateral currency swap).

Cryptocurrency Competition: 130 countries are developing Central Bank Digital Currencies (CBDCs), and the digital yuan has been piloted for cross-border trade, which could reshape payment efficiency but faces the challenge of sovereignty transfer.

Extreme fragmentation: If geopolitical conflicts escalate, it may lead to a divided camp of the US dollar, euro, and BRICS currencies, resulting in a sharp increase in global trade costs.

PayPal CEO Alex Chriss pointed out the key bottleneck: “From a consumer perspective, there is currently no real incentive to drive the adoption of stablecoins.” The company is launching a reward mechanism to tackle the adoption issue, while decentralized exchanges like XBIT are addressing trust issues through smart contracts.

Deutsche Bank’s report predicts that with the implementation of the “Beautiful Act,” the Federal Reserve will be forced to cut interest rates, and the dollar will significantly weaken. By 2030, when stablecoins hold $1.2 trillion in U.S. Treasury bonds, the global financial system may have quietly completed its on-chain reconstruction—dollar hegemony embedded in every transaction on the blockchain in code form, while risks spread to every participant through a decentralized network.

Technological innovation has never been a neutral tool. When the US dollar puts on the cloak of blockchain, the game of the old order is playing out on a new battlefield!