The GENIUS Act: How Washington Quietly Tilted Global Finance Toward China
While headlines chased noise, Congress pulled off something far bigger: it legalized one of the largest wealth transfers ever—and barely anyone blinked.
The GENIUS Act didn’t just “regulate” stablecoins. It banned them from paying interest. That single line flipped the entire game.
Start with the quiet extraction. Tether alone holds roughly $135B in U.S. Treasuries. At around 4.5%, that’s nearly $6B a year. Under the new rules, holders get nothing. The yield doesn’t disappear—it’s captured by issuers.
Now zoom out. On January 1, 2026, China flipped the switch on an interest-bearing digital yuan paying about 0.35%. For global merchants and treasuries, the choice just became brutally simple: pay to hold digital dollars, or get paid to hold digital yuan.
Capital has already noticed. Institutional money is rotating out of zero-yield stablecoins and into yield-bearing alternatives like BlackRock’s BUIDL and Franklin Templeton’s BENJI, pulling in billions through different legal structures that still offer close to 5%.
Then there’s the hidden fault line. Stablecoin issuers don’t have a Federal Reserve backstop. BIS research warns that in a liquidity shock, they could be forced into a rapid Treasury fire sale—driving yields higher and sending stress straight into the U.S. financial system.
By banning yield on digital dollars, the U.S. turned its currency into an extractive product. China, meanwhile, is offering a distributive one. This wasn’t about protecting dollar dominance. It may have regulated it into slow, quiet irrelevance.
