The GENIUS Act: Why the U.S. Just Handed China the Keys to Global Finance
Congress just legalized the largest wealth transfer in history—and almost nobody noticed.
While the world was distracted, the GENIUS Act officially prohibited stablecoins (like Tether) from paying interest to holders. Here is why this "regulation" is actually a financial time bomb:
The Yield Extraction: Tether holds $135B in Treasuries. At a 4.5% rate, that’s $6B in annual profit. Under the new law, you get $0. The issuers keep it all.
The China Factor: On Jan 1, 2026, China activated an interest-bearing Digital Yuan (0.35%). For global merchants, the choice is now: pay to hold USD or get paid to hold Yuan.
The Institutional Flight: "Smart money" is already abandoning zero-yield stablecoins. BlackRock (BUIDL) and Franklin Templeton (BENJI) are seeing billions in inflows because they offer ~4.9% yield through a different legal wrapper.
Systemic Risk: Stablecoin issuers have no Fed backstop. Per BIS Paper 1270, a liquidity crisis could force a massive Treasury fire sale, spiking yields and destabilizing the U.S. economy.
By banning yield on digital dollars, the U.S. has turned its primary export into an "extractive" product while China is offering a "distribution" product. We didn't secure dollar dominance; we regulated it into obsolescence.
