The “Beautiful Big Bill” intends to vigorously develop stablecoins and promote the Federal Reserve to cut interest rates

Author: Mask

A financial experiment spawned by the $36 trillion national debt crisis is trying to transform the crypto world into a "buyer" of U.S. debt, while the global monetary system has been quietly reshaped.

In the U.S. Capitol, a piece of legislation called the "Beautiful Big Bill" is being pushed forward in full swing. Deutsche Bank's latest report characterizes it as the "Pennsylvania Plan" for the United States to deal with its huge debts - by forcing stablecoins to purchase U.S. debt, the digital dollar will be incorporated into the national debt financing system.

This bill forms a policy combination with the GENIUS Act, which has mandated that all U.S. dollar stablecoins must hold 100% cash, U.S. debt or bank deposits. It marks a fundamental shift in the regulation of stablecoins. The bill requires stablecoin issuers to use 1:1 US dollars or highly liquid assets (such as short-term US Treasury bonds) as reserves, prohibits algorithmic stablecoins, and establishes a dual-track regulatory framework at the federal and state levels. Its goals are clear:

• Relieve pressure on US debt: force stablecoin reserve assets to be invested in the US debt market. According to the US Treasury Department's forecast, the global stablecoin market value will reach US$2 trillion by 2028, of which US$1.6 trillion will flow into US Treasury bonds, providing a new financing channel for the US fiscal deficit.

• Consolidate the hegemony of the US dollar: Currently, 95% of stablecoins are anchored to the US dollar. The bill strengthens the US dollar's "on-chain coinage rights" in the digital economy through a closed loop of "US dollar → stablecoin → global payment → US debt repatriation".

• Promote the expectation of interest rate cuts: Deutsche Bank's report pointed out that the bill puts pressure on the Federal Reserve to cut interest rates to reduce the financing costs of U.S. debt, while guiding the dollar to weaken and enhance the competitiveness of U.S. exports.

U.S. debt dam lake, stable currency becomes a policy tool

The total U.S. federal debt has exceeded 36 trillion U.S. dollars, and the principal and interest to be repaid in 2025 will be as high as 9 trillion U.S. dollars. Faced with this "debt dam lake", the Trump administration urgently needs to open up new financing channels. And stable currency, a financial innovation that once wandered on the edge of regulation, unexpectedly became a life-saving straw for the White House.

According to the signals from the Boston Money Market Fund Seminar, stablecoins are being cultivated as "new buyers" in the U.S. bond market. Yie-Hsin Hung, CEO of State Street Global Advisors, said bluntly: "Stablecoins are creating considerable new demand for the Treasury market."

The numbers speak for themselves: the current total market value of stablecoins is $256 billion, of which about 80% is allocated to U.S. Treasury bonds or repurchase agreements, with a scale of about $200 billion. Although it accounts for less than 2% of the U.S. bond market, its growth rate has attracted the attention of traditional financial institutions.

Citibank predicts that by 2030, the market value of stablecoins will reach 1.6 to 3.7 trillion US dollars, and the scale of US debt held by issuers will exceed 1.2 trillion US dollars. This volume is enough to rank among the largest holders of US debt.

Thus, stablecoins have become a new tool for the internationalization of the US dollar. For example, leading stablecoins such as USDT and USDC hold nearly 200 billion US dollars in US debt, equivalent to 0.5% of US Treasury bonds; if the scale expands to 2 trillion US dollars (80% allocation to US debt), the holdings will exceed any single country. This mechanism may:

• Distort financial markets: The surge in demand for short-term US debt has lowered yields, exacerbated the steepening of the yield curve, and weakened the effectiveness of traditional monetary policy.

• Weakening capital controls in emerging markets: Cross-border flows of stablecoins bypass the traditional banking system and weaken the ability to intervene in exchange rates (such as the crisis in Sri Lanka in 2022 due to capital flight).

Bill scalpel, financial engineering of regulatory arbitrage

The "Beautiful Big Bill" and the "GENIUS Act" constitute a sophisticated policy combination. The latter, as a regulatory framework, forces stablecoins to become the "taker" of U.S. debt; the former provides issuance incentives to form a complete closed loop.

The core design of the bill is full of political wisdom: when a user buys a stablecoin with $1, the issuer must use the $1 to buy U.S. debt. This not only meets compliance requirements, but also achieves fiscal financing goals. As the largest issuer of stablecoins, Tether will purchase a net $33.1 billion in U.S. Treasury bonds in 2024, becoming the world's seventh largest buyer of U.S. debt.

The regulatory grading system further reveals the intention to support oligarchs: stablecoins with a market value of more than $10 billion are directly regulated by the federal government, while small players are handed over to state-level agencies. This design accelerates market centralization. Currently, Tether (USDT) and Circle (USDC) have occupied more than 70% of the market share.

The bill also contains an exclusive clause: non-US dollar stablecoins are prohibited from circulating in the United States unless they are subject to equivalent supervision. This not only consolidates the hegemony of the US dollar, but also clears the way for the USD1 stablecoin supported by the Trump family, which has received a $2 billion investment commitment from Abu Dhabi investment company MGX.

Debt transfer chain, the mission of stablecoins to save the market

In the second half of 2025, the US Treasury market will usher in an increase in supply of $1 trillion. Faced with this flood peak, stablecoin issuers are placed with high hopes. Mark Cabana, head of interest rate strategy at Bank of America, pointed out: "If the Treasury Department turns to short-term debt financing, the incremental demand brought by stablecoins will provide policy space for the Treasury secretary."

The mechanism design is ingenious:

- For every $1 of stablecoin issued, $1 of short-term U.S. Treasury bonds must be purchased, directly creating a financing channel

- The growth in demand for stablecoins is converted into institutional purchasing power, reducing government financing uncertainty

- Issuers are forced to continue to increase their holdings of reserve assets, forming a self-reinforcing demand cycle

Adam Ackermann, portfolio manager at fintech company Paxos, revealed that several top international banks are negotiating on stablecoin cooperation, asking "how to launch a stablecoin solution within eight weeks". The industry's enthusiasm has reached its peak.

But the devil is in the details: stablecoins are mainly anchored to short-term US Treasury bonds, which has no substantial help for the contradiction between supply and demand of long-term US Treasury bonds. Moreover, the current scale of stablecoins is still insignificant compared with the interest expenditure of US Treasury bonds - the total scale of global stablecoins is US$232 billion, while the annual interest on US Treasury bonds exceeds US$1 trillion.

 The new hegemony of the US dollar, the rise of colonialism on the chain

The deep strategy of the bill lies in the digital upgrade of the US dollar hegemony. 95% of the world's stablecoins are anchored to the US dollar, building a "shadow dollar network" outside the traditional banking system.

Small and medium-sized enterprises in Southeast Asia, Africa and other places use USDT for cross-border remittances, bypassing the SWIFT system and reducing transaction costs by more than 70%. This "informal dollarization" has accelerated the penetration of the US dollar in emerging markets.

The more far-reaching impact lies in the paradigm revolution of the international clearing system:

- Traditional US dollar clearing relies on inter-bank networks such as SWIFT

- Stablecoins are embedded in various distributed payment systems in the form of "on-chain dollars"

- The US dollar settlement capability breaks through the boundaries of traditional financial institutions and realizes the upgrade of "digital hegemony"

The EU is clearly aware of the threat. Its MiCA regulations restrict the daily payment function of non-euro stablecoins and impose a ban on the issuance of large-scale stablecoins. The European Central Bank is accelerating the promotion of the digital euro, but progress is slow.

Hong Kong adopts a differentiated strategy: while establishing a stablecoin license system, it plans to launch a dual licensing system for over-the-counter transactions and custody services. The HKMA also plans to issue operational guidelines for the tokenization of real world assets (RWA) to promote the listing of traditional assets such as bonds and real estate on the chain.

Risk transmission network, countdown to a time bomb

The bill has buried three structural risks:

The first: US Treasury-stablecoin death spiral. If users collectively redeem USDT, Tether needs to sell US Treasury bonds for cash → US Treasury bond prices plummet → other stablecoin reserves depreciate → full collapse. In 2022, USDT was temporarily unpegged due to market panic. Similar events in the future may impact the US Treasury market due to the expansion of scale.

The second: The risk of decentralized finance is amplified. After stablecoins flow into the DeFi ecosystem, they are leveraged through liquidity mining, lending and staking. The restaking mechanism allows assets to be repeatedly pledged between different protocols, and the risk is amplified geometrically. Once the value of the underlying assets plummets, it may trigger a series of liquidations.

Third level: loss of monetary policy independence. The Deutsche Bank report directly pointed out that the bill will "put pressure on the Federal Reserve to cut interest rates." The Trump administration indirectly obtains the "right to print money" through stablecoins, which may undermine the independence of the Federal Reserve-Powell has recently rejected political pressure and hinted that there is no hope for a rate cut in July.

What's more difficult is that the ratio of US debt to GDP has exceeded 100%, and the credit risk of US debt itself has risen. If the US Treasury yield continues to invert or there is an expectation of default, the safe-haven property of stablecoins will be in jeopardy.

Global new chess game, on-chain reconstruction of economic order

Faced with the US actions, three major camps are forming in the world:

• Alternative camp: People in high-inflation countries use stablecoins as "safe-haven assets", weakening the circulation of local currencies and the effectiveness of central bank monetary policy. These countries may accelerate the development of local stablecoins or multilateral digital currency bridge projects, but face severe trade challenges.

And the international system will also change: from unipolar to "hybrid architecture", the current reform plan presents three paths:

• Extreme fragmentation: If geopolitical conflicts escalate, or a fragmented dollar, euro, and BRICS currency camp is formed, global trade costs will surge.

PayPal CEO Alex Chriss pointed out the key bottleneck: "From a consumer perspective, there is currently no real incentive to promote the popularization of stablecoins." The company is launching a reward mechanism to solve the adoption problem, while decentralized exchanges such as XBIT solve the trust problem through smart contracts.

A Deutsche Bank report predicts that with the implementation of the "Beautiful Big Bill", the Federal Reserve will be forced to cut interest rates and the US dollar will weaken significantly. By 2030, when stablecoins hold $1.2 trillion in US debt, the global financial system may have quietly completed the on-chain reconstruction - the US dollar hegemony is embedded in every transaction on the blockchain in the form of code, and the risk spreads to every participant through the decentralized network.

Technological innovation has never been a neutral tool. When the US dollar puts on the cloak of blockchain, the game of the old order is being staged on the new battlefield!