Today, I want to discuss a fascinating topic - the "Warring States Era" of stablecoins. In 2025, the United States passed an important law called the GENIUS Act, which completely changed the rules of the stablecoin game and triggered an unprecedented "digital dollar battle". Imagine if the stablecoin market is like the ancient Warring States period, then there are now four powerful "feudal lords" competing for dominance. Each alliance has its own characteristics and strategies, like four martial arts schools with distinct personalities. Let me introduce them to you one by one.
? Game Rule Transformation: What Did the GENIUS Act Change?
First, we need to understand this game-changing GENIUS Act. The name sounds cool, and its full title is the "Guidance and Establishing National Innovation Act for Stablecoins". You can think of it as the "constitution" of the stablecoin industry, establishing clear rules for an area that was once somewhat "wildly growing".
The most important provisions of this act are:
Reserves must be 100% backed: Just like banks must have enough money to redeem deposits, stablecoin-issuing companies must support each stablecoin with the safest assets like US dollar cash and short-term US Treasury bonds.
$10 billion "watershed": If your stablecoin's market value exceeds $10 billion, you must accept strict federal government supervision; if below this number, you can choose relatively relaxed state-level regulation. This is like setting an "age of majority" - small companies can grow under parental (state government) supervision, while large companies must face stricter "social rules" independently.
Cannot directly pay interest: The purpose of this provision is clear - prevent stablecoin issuers from launching an "interest war" to attract users by promising higher yields. If allowed, stablecoins would transform from "payment tools" to "speculative tools", completely deviating from their original purpose as digital cash. At the same time, this is also to appease the traditional banking industry and avoid stablecoins directly stealing banks' deposit business.
Threshold for big tech companies: Want tech giants like Amazon and Apple to issue stablecoins? Not so easy! They must undergo strict approval to prevent them from easily monopolizing the market using their massive user base.
More cleverly, the GENIUS Act allows establishing reciprocal relationships with foreign jurisdictions that are "essentially similar" to the regulatory system. Tether has already obtained a license in El Salvador, and with its strong political capital, it is entirely possible to lobby the US government to determine that El Salvador's regulatory system is "essentially similar", thereby opening a back door for USDT to re-enter the US market. It's like having a "get out of jail free" card that can bypass some strict domestic regulatory restrictions.
? The Third Force: Political Elite Group (USD1)
The third "faction" is the newest and most controversial one - an alliance centered around the USD1 stablecoin. If the previous two alliances were built on technical prowess and market accumulation, this alliance is a typical "politics + capital" strong combination, reminiscent of ancient "royal marriages".
The lineup of this alliance can be described as star-studded:
Political Star: Including USD1, the World Liberty Financial project is closely related to the Trump family. Opening the World Liberty Financial website, the tab title reads "Inspired by Trump, Powered by USD1", showing the political influence Trump provides for USD1.
Distribution Giant: Binance, as the world's largest cryptocurrency exchange, provides a powerful distribution network for USD1. Interestingly, while Binance is also a distribution channel for USDC, considering Coinbase's background, Binance clearly does not want to help a "competitor". Since Binance's own stablecoin project is not developing well, choosing USD1 with its deep political background can both meet its own needs and gain an advantage in competition with Coinbase.
Sovereign Capital: In March 2025, MGX, a state-owned investment institution in Abu Dhabi, announced a $2 billion investment in Binance and used USD1 to settle this investment. This move can be called "brilliant" - Binance cleverly used USD1 from MGX to create USD1 trading pairs on the platform, thereby constructing a complete channel for distributing USD1 to ordinary users. It's worth knowing that listing on top exchanges like Binance is usually extremely difficult and expensive, but USD1 easily solved all problems through this sovereign investment, truly achieving "killing multiple birds with one stone".
Infrastructure: Justin Sun plays a key role in this alliance, both as an investor and advisor, with USD1 choosing to be issued on his TRON network. For Justin Sun, this is more like a smart "political investment" - he provides infrastructure support for USD1 through his TRON network, while the Trump family "returns the favor" by helping him resolve legal disputes with the SEC. This mutually beneficial arrangement reflects the delicate balance of business-political relations.
This "top-down" market expansion strategy is completely different from the traditional cryptocurrency development path. The traditional model usually starts with technological innovation, then attracts users, and ultimately forms a network effect. The USD1 alliance, however, directly creates massive application scenarios and market demand through political influence and sovereign-level large transactions, which can be said to be a "dimensional strike" against traditional competition models.
However, USD1's political resource advantage is also a "double-edged sword". During Trump's presidency, the entire Trump family's crypto industry, including USD1, is indeed in its glory. But political winds are unpredictable, and once Trump leaves office and the Democrats return to power, USD1 may face the risk of political settlement. Therefore, USD1's political resources are both its greatest competitive advantage today and potentially its greatest uncertainty in the future. This business model highly dependent on political relationships is destined to experience greater ups and downs in the waves of political changes.
? The Fourth Force: Traditional Banks' Counterattack
The greatest threat to crypto stablecoins might not come from each other, but from the traditional financial system they are trying to subvert. And while the native players in the crypto world are fighting, the "behemoths" of the traditional world have quietly entered the scene.
JPMorgan's JPMD is interesting: it looks like a stablecoin, works like a stablecoin, but legally it's not a stablecoin, but a tokenized form of bank deposits. This difference is important and brings several "killer" features:
It can legally pay interest! Because it's essentially a deposit. This is something the GENIUS Act explicitly prohibits stablecoins from doing
It is directly backed by banks, with extremely high credit.
It operates under a mature banking regulatory framework, without needing to adapt to entirely new, untested stablecoin regulations.
You might ask at this point, isn't it invincible? Hold on, it has a huge limitation: it's a "private club". Only large institutions that have passed Jpmorgan's strict approval can join this network, and ordinary people cannot use it. Its battlefield is institutional settlement, not our daily payments.
Besides JPMorgan, other large banks like Bank of America are exploring issuing their own deposit tokens, and even considering forming a bank alliance to create a shared, interoperable digital currency dominated by banks. This is actually a coordinated defensive action by the banking industry to prevent being "disintermediated" by native crypto stablecoins. Their strategy is clever: borrowing new technology (blockchain) while retaining their core advantages, such as reputation, clear regulation, and seamless connection with the existing financial system.
This trend suggests that the future of digital dollars may become fragmented. The market will not move towards a single type of digital dollar, but will split into two major categories serving different markets: stablecoins dominating crypto native and retail markets, and deposit tokens dominating institutional and B2B markets.
? Challengers Outside the City Gates: Tech Giants' Diverse Strategies
While major alliances are fighting for territory, some tech companies and fintech companies are also finding their opportunities, but their strategies differ.
Stripe: The Wisdom of Selling Shovels. Stripe chose a very smart path: not directly participating in the stablecoin issuance competition, but providing infrastructure services for everyone. It's like not mining gold during a gold rush, but selling shovels to gold miners. By acquiring Bridge and Privy, Stripe has gained the ability of "stablecoin as a service", allowing any developer to easily issue their own stablecoin. The benefit of this strategy is that no matter who ultimately wins the stablecoin war, Stripe can benefit.
PayPal: Attracting Users with Rewards. Although PayPal's PYUSD has a market value of only $900 million, they offer an annual yield of up to 3.7% to attract users. This seems to violate the GENIUS Act's prohibition on stablecoin interest payments, but PayPal cleverly packaged it as a "loyalty reward", with funds coming from the company's own treasury, not the stablecoin reserve fund interest. This is legally similar to a credit card company saying "thank you for using my card, I'll give you 1% cashback from my income". This is a commercial promotion behavior.
Walmart and Amazon: Tripped Up by Law. For retail giants like Walmart and Amazon, the motivation to issue stablecoins is clear: reduce billions of dollars in credit card transaction fees annually and establish their own payment ecosystem. However, the main obstacle they face is the GENIUS Act's strict restrictions on non-financial companies issuing stablecoins. This is a major legislative setback for large tech and retail companies, forcing them to seek cooperation with other stablecoin issuers.
Meta: Cautious Return. After the disastrous failure of the Libra project, Meta has become extremely cautious, clearly stating that its new strategy focuses on "actual payment scenarios" rather than "reshaping the monetary system", such as concentrating on providing cross-border payment services for Instagram creators. Due to high congressional attention (senators have already written to inquire), Meta is likely to choose to collaborate with existing stablecoin issuers, making payment scenarios on social platforms like Instagram a key battlefield for major stablecoins.
? Future Outlook: The Conclusion of Four Powerhouses
After reviewing these four "factions", you might ask: Who will be the ultimate winner? In fact, this war may not have a single winner. A more likely scenario is market segmentation:
Institutional Market: Bank alliance's deposit tokens may dominate, as they can pay interest, have clear regulation, and better meet institutional needs.
US Retail Market: The USDC alliance, with its compliance and deep integration with the largest US exchanges, may continue to lead.
Global Emerging Markets: The USDT alliance, with its first-mover advantage and deep roots in emerging markets, may continue to reign supreme.
Politically Driven Special Scenarios: The USD1 alliance might play a unique role in specific political and sovereign transactions (such as large-scale energy deals).
? In Conclusion
This stablecoin war reflects not just a competition of technology and business models, but also a contest of different financial philosophies and governance models. Traditional finance emphasizes safety and regulation, crypto-native projects pursue innovation and decentralization, while political capital attempts to redefine rules through power and relationships.
For us ordinary users, this competition is actually a good thing. It drives technological innovation, improves service quality, and provides us with more choices. Regardless of who ultimately wins, the era of digital dollars has arrived, and we are all witnesses and participants in this historical process.
How will the future unfold? Let's wait and see this fascinating "Four Kingdoms Saga"!
