What does it mean when stablecoin "rebels" apply for licenses?

Crypto Assets and Bitcoin once aimed to topple banks and end the dollar hegemony. Today, however, they hope banks will issue crypto assets backed by the dollar.

Written by: Buttercup Network & Thejaswini

Compiler: Shaw Golden Finance

In 2025, the rebels did not storm the banks. They applied for a license from the Office of the Comptroller of the Currency (OCC).

I am working hard to understand the whole "GENIUS Act" phenomenon.

The more I think about it, the more I feel that the whole thing is utterly absurd. So please patiently listen to me explain how we moved from "quick action, breaking the norms" to "quick action, compliant regulation."

The bill has been signed and is now in effect, and we finally know all the rules. Stablecoins are regulated and are no longer mysterious, and we are clear about who can issue them, who will regulate them, and the entire operational mechanism. But this naturally raises a question: what does all this mean?

If you ask crypto assets practitioners, they will be extremely excited, saying this is the moment for crypto assets to go mainstream, a regulatory revolution that changes everything. They will passionately discuss "regulatory clarity," "institutional adoption," "the future of currency," while tightly holding that 47-page bill as if it were the constitution.

If you were to ask a U.S. Treasury official, he would talk to you at length about how this has reinforced the dominance of the dollar more than ever, how it has made everything safer and more reliable, how it has brought investments back to the U.S., and all those bureaucratic clichés.

Who is the winner here? On the surface, it seems like both sides. But to be honest: the greater benefits still flow to the regulators. Crypto Assets and Bitcoin once aimed to topple banks and end the dollar hegemony. Now, they hope for banks to issue Crypto Assets backed by the dollar.

The core contradiction of the whole matter is: banks are actually fearful of stablecoins, which is entirely reasonable. They see trillions of dollars potentially fleeing from traditional deposits into zero-yield, fully reserved digital tokens. So what did Congress do? They banned interest payments on stablecoins, essentially to protect banks from their own fear of competition.

Legal provisions:

"No authorized payment stablecoin issuer or foreign payment stablecoin issuer shall pay any form of interest or yield (whether in cash, tokens, or other compensation) to its holders solely for holding, using, or retaining any payment stablecoin."

At the same time, Crypto Assets are working to build a trustless, decentralized alternative to traditional finance. Today, you can send stablecoins on-chain through an embedded widget in a venture-backed application... and the application settles with licensed issuers... who, in turn, collaborate with JPMorgan Chase. The future is here. It looks just like the past—only the user experience is better, and there are more regulatory documents.

The "GENIUS Act" created this amazing Rube Goldberg machine, and you can have revolutionary blockchain technology, but the condition is:

• Obtain approval from the currency regulatory authority
• Maintain a 1:1 reserve ratio of U.S. Treasury bills.
• Submit the monthly certification document signed by the CEO and CFO.
• Allows authorities to freeze your tokens upon command
• Committed to never paying interest
• Limit business activities to the scope of "issuance and redemption of stablecoins".

The last sentence is particularly interesting. You can completely change the financial industry, but if you try to use the revolutionary finance you have changed for other things, that simply won't do.

What we are witnessing is a movement that should have been anti-establishment being institutionalized. Circle and other existing stablecoin issuers are cheering because most of them are already compliant, so now they can watch their less-regulated competitors being kicked out of the "sandbox."

At the same time, Tether faces a life-or-death choice: either become transparent and accountable, or be banned by American exchanges before 2028. For a company that started with opacity and offshore banking, this is akin to making a vampire go to work during the day.

Of course, Tether itself doesn't need to worry too much about this. Its market capitalization reaches 162 billion USD, larger than Goldman Sachs, larger than the GDP of most countries, and frankly, larger than the entire regulatory agencies trying to oversee it. When you reach such a scale, "comply or die" sounds more like a suggestion than a threat.

"Libra Clause" - This clause essentially prevents large technology companies from arbitrarily issuing stablecoins - named after Facebook's failed attempt to create a global digital currency. Remember when everyone was worried that Facebook might undermine sovereign currencies? Today, we have established a system in which Facebook must obtain unanimous approval from the Federal Council to issue a digital token that cannot pay interest and must be fully backed by U.S. Treasury bonds.

There are also practical economic reasons that explain why everyone suddenly started paying attention to this issue. Currently, American merchants have to pay transaction fees of 2% to 3% to Visa and Mastercard for each transaction, which often turns out to be their largest expense after deducting payroll costs. Meanwhile, stablecoin payments for large settlements might only cost a few cents, or even less than 0.1%, because blockchain infrastructure does not require a massive network of banks and credit card processors to take a cut. When annual credit card processing fees reach $187 billion, keeping that money in the merchants' pockets is real cash. It is not hard to understand Amazon and Walmart's interest in stablecoin solutions. If digital dollars can be sent directly, why pay fees to credit card giants?

Then there's that kind of feedback loop that no one wants to mention, which is somewhat frightening. If stablecoins really succeed, we could be talking about an issuance of trillions of dollars—then a significant portion of the demand for U.S. Treasuries would come from stablecoin reserves.

This sounds good until you realize that the demand for stablecoins is essentially more unstable than traditional institutional buyers. If people lose confidence in stablecoins and start mass redemptions, all those government bonds will flood the market at once. Suddenly, the borrowing cost for the U.S. government depends on the mood swings of cryptocurrency Twitter users. It's like linking your mortgage repayments to the emotional fluctuations of day traders. The treasury bond market has seen a lot, but this is the first time experiencing "algorithmic selling pressure caused by panicking stablecoin users."

The most exciting part of all this is that it reflects the journey of Crypto Assets from an anarchist currency to an institutional asset class. Bitcoin was supposed to be a peer-to-peer electronic cash that required no trusted third party. Now, we have federal laws ensuring that the digital dollar can only be issued by widely trusted, tightly regulated third parties, which must then report to an even more trusted fourth party.

The law requires stablecoin issuers to be able to freeze tokens on the blockchain network at the request of authorities. This means that every so-called "decentralized" stablecoin must have a centralized "kill switch." This is not a flaw, but a feature.

We have successfully created a censorship-resistant currency with mandatory censorship features.

Don't get me wrong. I absolutely support regulatory clarity and dollar-backed stablecoins. This is indeed great: crypto innovation has actual rules, and the mainstreaming of the digital dollar feels like a genuine revolution. I fully support it. But let's not pretend this is a generous and enlightened act by regulators. The intervention of regulators is not because they suddenly developed a passion for crypto innovation. Rather, someone walked into the Treasury and said, "Hey, what if we could get the whole world to use the dollar more, but in digital form, and have them buy more treasury bonds to back these dollars?" Suddenly, stablecoins transformed from "dangerous crypto asset things" into "a great tool for consolidating dollar hegemony."

Each time a USDC token is minted, it signifies the sale of another U.S. Treasury bond. With stablecoins amounting to $242 billion, this translates to hundreds of billions of dollars directly funding Washington and boosting global demand for U.S. government debt. Every cross-border payment represents another transaction that does not involve euros or yen, and each time a regulated U.S. stablecoin is listed on a foreign exchange, it means another stronghold for the U.S. monetary empire.

The "GENIUS Act" is the most ingenious diplomatic policy tool that is operating under the banner of domestic financial regulation.

This indeed raises some thought-provoking questions about what we are actually building. What happens when the entire Crypto Assets ecosystem becomes an appendage of U.S. monetary policy? Are we creating a more decentralized financial system, or are we merely constructing the most complex dollar distribution network in the world? If 99% of stablecoins are pegged to the dollar, and every meaningful innovation requires approval from the U.S. Office of the Comptroller of the Currency, have we inadvertently turned this revolutionary technology into the ultimate fiat currency export business? If the rebellious energy of Crypto Assets is channeled into making the existing monetary system more efficient, rather than replacing it, does it really matter to anyone as long as payments can be carried out smoothly?

Faster speed, can we all make money? These may not be issues. It was just that when all this started, no one thought we would solve these problems.

Listen, I've been continuously mocking this approach, but the fact is it might actually work. Just like we evolved from the wildcat banking of the 1830s to the Federal Reserve System, we may be witnessing Crypto Assets grow from a chaotic adolescence into a mature, subdued yet systemically important part of financial infrastructure.

To be honest? For the 99.9% who just want to transfer money quickly and cheaply, without thinking about monetary theory or the concept of decentralization, this might be exactly what they need.

Banks are preparing to become the main issuers of these newly regulated stablecoins. JPMorgan Chase, Bank of America, and Citigroup are all preparing to offer stablecoin services to their clients. The institutions that these Crypto Assets originally sought to disrupt will now become the main beneficiaries of regulatory recognition for Crypto Assets.

This is not the revolution anyone expected, but perhaps it is a revolution that everyone can experience. And from a certain strange perspective, this can also be considered a stroke of genius.