Stablecoins in the USA: Politics, Markets, and Rules

<span><span>We examine how stablecoins moved from the periphery of cryptocurrency markets and regulatory scrutiny to becoming the centerpiece of strongly bipartisan U.S. legislation. We argue that stablecoins became politically viable because they were increasingly understood as instruments of U.S. monetary strategy: privately issued digital dollars that could reinforce, rather than undermine, dollar dominance if brought within a federal regulatory framework. The case for federal regulation was therefore both prudential and strategic. Regulation offered a way to make private-dollar innovation serve public monetary power. To build support for this claim, we analyze the institutions, ideas, and interests that shaped the GENIUS Act. First, we highlight how the President’s Working Group reframed stablecoins as a prudential and payments problem compatible with existing institutional arrangements. Second, we trace the ideas that shaped the legislation, including stablecoins as a private-money problem, a payments innovation, an instrument of dollar statecraft, and a politically viable alternative to central bank digital currencies. While these ideas were not always harmonious, together they pushed policy toward allowing regulated, privately issued payment stablecoins. Third, we examine how interest groups reshaped both the debate and the framing of legislation. We conclude by assessing the GENIUS Act’s achievements and examining the questions it leaves unanswered.</span></span>