The United States is launching the third generation Dollar

The United States has launched a new phase in the development of the US dollar, after Congress passed a bill called GENIUS to regulate stable coins, in a move that could turn the US currency into a global payment medium directed directly to individuals, away from the traditional frameworks of central banks and governments.

Observers believe that this shift gives the dollar a role beyond being an international reserve currency or a commercial exchange instrument, to become an option available to individuals around the world in times of crisis, allowing them to quickly switch from their local currencies without waiting for official approvals from their monetary authorities.

Weeks after the law’s passage, an adviser to the Russian president, Anton Kubyakov, warned of its potential repercussions, arguing that it could give Washington unprecedented ability to restructure its huge debt exceeding tens of trillions of dollars.

The GENIUS Act provides that stable-coin issuers are legally recognized in the United States, provided that their cash reserves are invested in short-term US Treasury bills.

In practice, this condition creates a sustained demand for the dollar and its government debt instruments, regardless of interest levels, as compliance with this requirement becomes a condition for survival in the market.

But this regulatory framework has raised concerns in the US banking community, especially at small and medium-sized banks that rely heavily on individual deposits.

Bankers fear that the shift of some of the savings to stable-coins will reduce their ability to finance small businesses and households.

JPMorgan also expressed concern about potential loopholes in the law, noting that incentives offered by exchanges and distribution agents – such as bonuses and indirect returns – are not clearly regulated, which could weaken restrictions and increase pressure on the traditional banking system.

Those concerns prompted the American Bankers Association’s local banker’s council to ask the Senate to tighten the legal framework, warning against exploiting what it called regulatory loopholes in some stable-coin models.

Throughout its history, the US dollar has undergone several pivotal shifts, as until 1971, it was tied to the Bretton Woods system and backed by gold, before US President Richard Nixon decided to break the link, opening the door to the large-scale internationalization of the US currency.

Analysts believe that the GENIUS Act represents the third stage in the dollar’s journey, as it allows it to enter the decentralized sphere of digital currencies and communicate directly with users in different countries, without the need for prior coordination with their governments.

The shift comes at a time when the United States is facing record levels of public debt, which is approaching $36 trillion, nearly double its size just a decade ago.

These pressures have caused sharp political divisions within Congress in recent years, culminating in a prolonged government shutdown over the borrowing ceiling.

Some experts believe that building a global monetary system based on a decentralized digital architecture, but whose regulatory keys are in Washington’s hands, could give the United States new tools to manage its debt and boost demand for its bonds, while maintaining the dollar’s position at the heart of the global financial system for decades to come.

In contrast, European policymakers have begun to sound the alarm, with a number of MEPs calling for accelerating the launch of the digital Euro or supporting stable-coins denominated in the European currency to balance the emerging global market.

Some analysts link the strong gains recorded by Gold and Bitcoin over the past two years to the discussions that preceded the passage of the GENIUS Act, arguing that investors and central banks have moved proactively to hedge against the expansion of US monetary influence.

While many central banks have stepped up their purchases of gold and physical assets, retail investors and financial institutions have turned to major Cryptocurrencies, led by Bitcoin, as an alternative store of value.

However, the overall market capitalization of the world’s two largest stable-coins, USDT and USDC, remains at around $260 billion, a figure that remains modest compared to the size of US Treasury bills held by major countries such as Japan and China.