While the GENIUS Act legitimizes stablecoins and strengthens dollar hegemony, the potential extension of the Patriot Act threatens Bitcoin users’ privacy.
“Bitcoin stands for freedom. If we don’t embrace bitcoin and cryptocurrency, China will. I want it to be mined, minted, and made in the USA. We want America to become the crypto capital of the planet and bitcoin superpower of the world,” proclaimed Donald Trump from the stage of the Bitcoin Conference in Nashville on July 27, 2024, adding the promise to create a national strategic bitcoin reserve.
Just over a year later, that same promise has proven a disappointment for many bitcoiners who hoped for a change in American policy approach toward Bitcoin and digital assets during the tycoon’s second term.
In the months following his election, Trump has shown growing support toward stablecoin issuers, collaborating with regulated entities that configure themselves as private versions of CBDC (Central Bank Digital Currency). The approval of the GENIUS Act has given further legitimacy to this political line, creating a regulatory framework that favors the growth of dollar-pegged stablecoins.
Tools like USAT, designed specifically for the US market, target a clientele that already possesses traditional bank accounts, PayPal, CashApp, Venmo and other fintech solutions, which makes their added value for American citizens rather questionable.
Simultaneously, the possible application of the Patriot Act intensifies regulatory pressure on Bitcoin, revealing a government strategy increasingly oriented toward control and surveillance.
Washington’s red carpet for stablecoins
The Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), signed by President Trump on July 18, 2025, represents the first comprehensive federal framework for stablecoin regulation in the United States. This legislation, approved with broad bipartisan support (68 favorable votes out of 30 against in the Senate and 308 out of 122 in the House), establishes a federal-state supervisory system that definitively legitimizes stablecoins in the American financial system. During the law’s signing, Trump stated: “stablecoins strengthen the dollar and significantly increase its importance.” Treasury Secretary Scott Bessent defined the new provision as a key factor to “strengthen the dollar’s status as global reserve currency and stimulate demand for US Treasury bonds.”
The measure introduces several key points:
- definition and classification: the GENIUS Act creates a new legal category for stablecoins, defining them as “payment stablecoin” and exempts them from classification as “security” or “commodity”;
- reserve requirements: the law requires all stablecoin issuers to maintain 1:1 reserves, composed of assets such as US dollars, bank deposits and short-term US Treasury bonds;
- authorized issuers: stablecoin issuance is strictly limited to regulated entities, including banks and non-bank financial institutions that receive federal approval;
- transparency: issuers are obligated to publish monthly reports on their reserves, with mandatory certification by external auditors;
- yield prohibition: the law explicitly prohibits issuers from offering interest or yields to stablecoin holders;
- stability and security: anti-money laundering regulations (Bank Secrecy Act) extended to stablecoins, with obligation of technical tools to freeze funds deemed illegal.
Tether’s move
Following the GENIUS Act’s approval, Tether announced the launch of USAT, a new stablecoin specifically designed to be fully compliant with the new regulation. CEO Paolo Ardoino explained that USAT is intended for US residents.
The initiative will allow Tether to legally access the US market. While USDT operates with an offshore infrastructure managed by Tether Holdings Limited and has a diversified reserve structure that includes not only dollars and US Treasury bonds, but also Bitcoin, gold and land, the new stablecoin USAT will comply with the reserve requirements imposed by the GENIUS Act. USAT will be issued by Anchorage Digital Bank, while reserves in US Treasury bonds will be entrusted to the custody of Cantor Fitzgerald, following the same model already adopted for USDT.
Furthermore, Tether announced hiring Bo Hines, former White House official and member of Trump’s Digital Asset Advisory Council, as CEO of its US division. Officially, the company speaks of an assignment aimed at “leading the expansion and launch” of USAT, but the move appears rather as a lobbying operation to gain favor and influence with the American government.
Circle, issuer of USDC, has also reacted to the new law by requesting a federal banking license to create the “First National Digital Currency Bank.” This move would position Circle under direct supervision of the Office of the Comptroller of the Currency (OCC) and the Federal Reserve, transforming it from fintech to federally regulated banking institution.
Extending dollar hegemony
Stablecoins are effectively consolidating a private version of digital dollar under US regulatory control.
The current administration has chosen not to pursue development of a national CBDC (Central Bank Digital Currency), citing concerns related to privacy and banking stability. Instead, it has opted for a different path, collaborating in a public-private model with stablecoin issuers. As highlighted by Alex Gladstein, Chief Strategy Officer at the Human Rights Foundation, this strategy proves an ingenious way to project American dollar power globally without the costs or political implications of state infrastructure.
For the United States, a benefit that the GENIUS Act brings is the increase in demand for American Treasury bonds. With growing global adoption, stablecoin issuers become a new and powerful buyer of US debt. In an era when traditional debt holders (such as China and Japan) have slowed or reduced their purchases, the exponential growth of the stablecoin market, with projections reaching $2,000-$4,000 billion by 2035, provides the government with a source of demand to finance its deficits.
With over $120 billion in Treasury bonds, Tether has become one of the largest US creditors, becoming a strategic partner of the stars and stripes government.
The silent war on Bitcoin
While stablecoins receive regulatory red carpets, Bitcoin faces a completely different reality.
The most alarming news comes directly from the Financial Crimes Enforcement Network (FinCEN): on September 9, director Andrea Gacki confirmed that the Treasury is finalizing the so-called “mixer rule,” which will apply Patriot Act provisions to Bitcoin and other cryptocurrencies. This rule is not limited to mixers, but represents a generalized ban on any software or behavior that guarantees transactional privacy to public blockchain users.
The mixer rule would consider the following activities as “primary concern for money laundering”:
- pooling or aggregation of cryptocurrencies from multiple people, wallets or accounts;
- use of computer code to coordinate or manipulate transaction structure;
- subdivision of bitcoins for transmission through independent transactions;
- creation of single-use wallets, addresses or accounts;
- exchange between different types of cryptocurrencies and facilitation of delays in transactional activities.
These provisions could put under suspicion even users who use common privacy practices, potentially leading to criminal liability similar to smurfing in traditional finance, that is, the fragmentation of large sums of money into many small movements to evade banking controls, a crime that carries a federal prison sentence of up to five years.
Simultaneously, Congress is reexamining the Special Measures to Fight Modern Threats Act, originally introduced in 2022 by Representative Himes and now reintroduced by Representative Zach Nunn. This regulation would grant the Treasury power to prohibit any transaction deemed risky without notice or public consultation. As observed by Nicholas Anthony of the Cato Institute, the Treasury could use this authority to prohibit US banks from processing Bitcoin transactions validated by miners located abroad.
The extension of the Patriot Act and possible approval of the Special Measures to Fight Modern Threats Act represent a direct attack on privacy on Bitcoin and digital assets. The objective would seem to be creating a two-tier digital financial system: a “legitimized” tier (stablecoins, regulated exchanges and spot ETFs) where surveillance is total, and a “hidden” tier (self-custody, no-KYC exchanges and privacy tools) that is gradually excluded and marginalized.
Francis Pouliot, CEO of Bull Bitcoin, commented:
The American dual policy is the result of a targeted strategy. The US government is legitimizing and promoting stablecoins because they represent a controllable extension of its financial power, a “Trojan horse” that strengthens dollar hegemony in the digital age. Bitcoin represents the opposite: a monetary system completely independent from state control. It’s no coincidence that President Trump himself in 2021 declared: “Bitcoin just seems like a scam. I don’t like it because it’s another currency competing against the dollar,” adding he wanted to make the US currency “the currency of the world.” Its deflationary nature, limited supply and impossibility of centralized control make it a competitor.
