Why the U.S. Must Lead: Securing the Dollar and the Future of Payments in the Age of Stablecoins
By Natalia Bailey, Principal, Gattaca Horizons LLC
The global financial system is being reshaped by digital technologies. Payments innovation now moves at the clock speed of the blockchain —not the legacy banking day. Stablecoins are already operating in global payments systems, moving billions across borders and redefining how economic activity functions. They promise faster, cheaper, more inclusive payments, but they also raise key questions regarding financial crime, consumer protection, monetary policy, and the future of the U.S. Dollar.
The discussion at the recent Digital Dollar Project Salon Dinner underscored a clear consensus: the United States must lead now—not only to safeguard consumers and markets, but to preserve the strategic primacy of the dollar in an increasingly digital global economy.
Our current mission is to look into the horizon and consider how policy frameworks will shape the future of money. The themes below capture both the opportunities and the tensions shaping the next chapter of money.
The Dollarization Paradox: Utility vs. Monetary Sovereignty
For much of the world, the appeal of stablecoins is straightforward. They provide immediate access to stability in economies where local currencies are volatile and remittance costs remain high.
For households, that means faster settlement and lower transfer fees. For businesses, it means simpler cross-border transactions and new global market access. For both, it means possession of a stable financial instrument.
Yet this utility creates a profound paradox for foreign governments. For central banks globally, the growing use of dollar-backed stablecoins can directly weaken their monetary sovereignty by shifting savings and economic activity into a digital dollar zone. If unmanaged, that trend could erode local monetary policy and strain financial stability.
The U.S. must navigate this tension carefully—fostering dollar inclusion while remaining cognizant to the stability concerns of its global partners.
Domestic Efficiency and Small Business Adoption
Within the U.S., the near-term opportunities lie in settlement efficiency and treasury management.
Stablecoins can move funds in seconds instead of days, reducing float and improving liquidity for businesses of all sizes. For small firms, accepting stablecoins can mean fewer intermediaries, faster settlement, and lower fees compared to traditional card networks.
These examples illustrate that stablecoins are not just a frontier technology—they are becoming a practical and accessible tool that promotes operational efficiency within the domestic economy.
Key questions remain, however. Will stablecoins erode commercial bank deposits or bring cash into the digital realm? Should issuers be able to share broader economic benefits with customers in competition with bank deposits? And, what regulatory guardrails should be imposed as the GENIUS Act is implemented?
Micropayments and the Zero-Cost Debate
Subscription models and microtransactions—small, frequent payments for content, gaming, or streaming—are another emerging use case. Stablecoins could make these low-value transactions economical where traditional rails remain too costly or slow.
Still, no payment system is truly costless. Fraud prevention, dispute resolution, and compliance all carry ongoing expenses—as does the cost of maintaining a blockchain.
The real question is not whether payments can be free, but who ultimately pays for safety and assurance in a decentralized system.
The Regulatory Crisis of the Intermediary
The existing system for managing compliance—built on the assumption of centralized financial intermediaries—is being tested by decentralized networks and the emergence of Agentic AI.
- Fragmented KYC Responsibility: In traditional finance, banks carry well-understood responsibilities for Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance. In the stablecoin world, those duties are fragmented across issuers, wallets, exchanges, and potentially even autonomous AI agents. Without clear standards, compliance is met with ambiguity. Key questions remain, including when an intermediary’s obligations begin and end in a tokenized world.
- Agentic AI and Accountability: The rise of Agentic AI—autonomous systems that can initiate or execute transactions on behalf of individuals—compounds the challenge. Policymakers must determine who owns the agent and who is ultimately liable when it acts improperly. The question is not whether AI will participate in payments, but how responsibility scales when decision-making becomes automated.
- The Data and Privacy Conflict: Current compliance models rely heavily on duplicative collection and storage of personally identifiable information (PII), creating “honey pots” for data breaches. Moving forward, privacy-preserving digital identity standards will be essential to maintain compliance and security without overexposing consumer data.
The Strategic Imperative: Avoiding Global Fragmentation
The GENIUS Act marks a pivotal step in U.S. leadership—but it is only the beginning. The next immediate phase must focus on building comprehensive frameworks that avoid domestic fragmentation and prevent payments activity from migrating offshore.
- Standards and Interoperability: Regulators are now tasked with implementing rules under the GENIUS Act. Broader frameworks for interoperability, cybersecurity, and supervisory consistency must be developed in coordination with global partners. Without such coordination, fragmentation will persist, making U.S. markets less efficient and diminishing the global reach of the dollar.
- Global Competition: The European Union’s MiCA framework and forthcoming G20 AML standards highlight divergent international approaches. If the U.S. lags behind, clearing and payments activity could migrate offshore. To preserve influence, the U.S. must set, not follow, global standards for digital assets and payments.
- The Need for a Secure Anchor: Some experts have urged exploration of tokenized wholesale dollars to serve as a secure settlement layer in a world of competing stablecoins. Such an anchor could enhance systemic stability by providing a backstop of trust while enabling private-sector innovation to flourish around it.
Preserving trust in the Dollar requires proactive leadership. Stablecoins have moved beyond theory—they are already reshaping the infrastructure of money. The challenge now is to translate the policy momentum of the GENIUS Act into durable, market-enhancing infrastructure. If done right, the U.S. can strengthen both the dollar’s reach and the resilience of the global financial system—anchoring innovation in safety, clarity, and trust.
The Digital Dollar Project will continue to explore these and other issues related to U.S. digital dollar innovation in future gatherings of private- and public-sector thought leaders. Look for further reports on our work here in this blog.
