Though the U.S. dollar index (DXY) is still struggling to surpass 100 points, the Donald Trump administration thinks the global demand for the dollar is massive and will only grow.
And the White House has pinned its hope on a law focused on “digital dollars.”
Related: Explained: What is a stablecoin?
It was in July 2025 that Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act into law. The legislation aims to regulate stablecoins pegged to the U.S. dollar.
As the name suggests, a stablecoin tries to stabilize its value by being pegged 1:1 to the U.S. dollar. Since one USD-pegged stablecoin holds the same value as one USD, it is also called a “digital dollar.”
The GENIUS Act mandates stablecoin issuers to back their stablecoins with dollar reserves made up of high-quality liquid assets like U.S. Treasury bills.
The leading stablecoin issuers Tether and Circle are, in fact, among the largest holders of U.S. Treasury bills.
But USD-pegged stablecoins are facing a major challenge on another legislative front as neither the banking nor the crypto industries seem ready to compromise on stablecoin rewards in the CLARITY Act.
The current draft has a provision restricting crypto platforms from offering rewards to stablecoin holders so that these platforms can’t offer what would be in fact unregulated bank deposits.
Since one stablecoin holds the same value as that of one USD, banks fear their customers would transfer their deposits to crypto platforms in pursuit of rewards (higher than the interests offered by banks). The crypto industry says the banks are acting in an anti-competitive manner.
Both Trump and Treasury Secretary Scott Bessent have been pressuring both sides to reach a compromise but it’s a deadlock so far.
Patrick Witt, the Executive Director of the President’s Council of Advisors for Digital Assets at the White House, said on March 11 that in the noise around the rewards debate, one shouldn’t forget that the stablecoins compliant with the GENIUS Act will “actually lead to deposit inflows.”
As the global demand for the U.S. dollar is massive, foreigners shall exchange their local currencies for stablecoins from a US-based issuer.
