The Global Crypto Industry Welcomed America First. Careful What You Wish For.

President Donald Trump signs the Guiding and Establishing National Innovation for U.S. Stablecoins Act, which codifies the use of stablecoins, on July 18. (BRENDAN SMIALOWSKI/AFP/Getty Images)

About the authors: Howard A. Fischer is a partner at Moses & Singer and was previously a senior trial counsel at the U.S. Securities & Exchange Commission. Robert B. McFarlane is a litigator at Moses & Singer.

For years, digital asset enthusiasts outside the U.S. were frustrated. Under President Joe Biden, they saw then-Chair of the Securities and Exchange Commission Gary Gensler’s enforcement-first approach to digital assets as a “war against crypto.” Given the outsize economic and regulatory influence of the U.S. on the global stage, they thought this hostility was stifling the industry’s development. If the U.S. embraced crypto, they felt, the entire global digital assets community would benefit.

Wish granted, in part. President Donald Trump has issued many crypto-friendly executive orders and appointments in his second term. The newly relaxed legal and regulatory atmosphere isn’t an olive branch to the international crypto traders, however. It is just another tool to assert U.S. global dominance.

Crypto policy is a key part of Trump’s America First mercantilist agenda. By assuring the persistence of dollar dominance in international transactions and by establishing a global crypto regime governed by U.S. rules and oversight, Trump is ensuring that the U.S. remains an economic hegemon as crypto assets grow globally.

Consider the Genius Act, which Trump signed into law in June. It established a framework for regulating stablecoins—digital assets intended for use as means of payment or settlement. The driving rationale of the Act was to secure global dollar dominance.

In order to sell stablecoins in the U.S., a non-U.S. issuer must hold reserves in a U.S. financial institution sufficient to meet liquidity demands of U.S. customers.” Those reserves will inevitably take the form of U.S. Treasuries.

There has been no attempt to hide the fact that a central motivation behind the Genius Act is cementing U.S. monetary and regulatory power. Trump’s fact sheet about the legislation said that plainly: “Stablecoins will play a crucial role in ensuring the continued global dominance of the U.S. dollar as the world’s reserve currency.” It will do so by increasing demand for Treasuries, since by law stablecoins need to be pegged to U.S. assets.

To be sure, the vast majority of stablecoins were already dollar-denominated. But it is clear that the Trump administration’s intent is to ensure that continues to be the case.

It isn’t only the dominance of the dollar, but also of U.S. oversight that is at the heart of the administration’s crypto approach. In order for non-U.S. stablecoin issuers to sell stablecoins to people in the U.S., the Genius Act requires extensive submission to the U.S. legal regime. It requires non-U.S. issuers to register with a U.S. oversight agency. They must also have, in their home country, a “regulatory and supervisory regime” that the U.S. secretary of the treasury sees fit and comparable to that of the U.S.

And how is that determined? Per the Genius Act, the Treasury Department is to engage in more detailed rule making to establish a system for determining if a non-U. S. based regime has a comparable regulatory structure. This effectively gives the U.S. government veto power over non-U.S. regulatory schemes. Foreign regimes must adopt a legal structure that accords with U.S. demands.

Crypto economies are experiencing significant growth outside the U.S., especially in jurisdictions without well-established financial systems. According to the International Monetary Fund, Sub-Saharan Africa and Latin America saw the most growth in crypto adoption last year, far outpacing the U.S. And most crypto investors—an estimated 60%—live in Asia.

What if U.S. domestic concerns militate in favor of amending the legal structures of those countries? Will there have to be renewed reviews by U.S. authorities? Indeed: That requirement is right there in the act.

The Genius Act explicitly requires ongoing review. Treasury Department approval isn’t permanent, but is subject to rescission “if the Secretary determines that the regulatory regime of such foreign country is no longer comparable to the requirements established under this Act.”

Foreign crypto enthusiasts who expected a more open and equal system after the end of Gensler’s so-called war on crypto may be disappointed. They might chafe at the regulatory sovereignty of American regulators, especially as other jurisdictions are attempting to establish themselves as crypto centers. Both the United Arab Emirates “Payment Token Services” regulation and the European Union’s “Markets in Crypto Assets” scheme predate the Genius Act.

The U.S. doesn’t appear to want to participate in the global digital assets marketplace as an equal participant, but as a hegemon, with U.S. dollars and U.S. regulations as the default global standards.

Trump has made it clear that he wants to center the U.S. market in every aspect of the global economy. Crypto is no different.

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