Hagerty’s Bet
GENIUS Act as Dollar Weapon, Not Crypto Regulation
Senator Bill Hagerty’s recent speech was a call to weaponize stablecoins for U.S. economic dominance.
It doesn’t just sound dramatic, it is. Replay his words, and the logic becomes clear: the Genius Act is not about innovation for innovation’s sake (well well well). It’s about giving the U.S. a lever to modernize its payments infrastructure, soak up global demand for Treasuries, and entrench dollar supremacy in a world that’s drifting towards fragmentation.
Quote by quote…..
“This will ensure U.S. dollar dominance. It will advance our position as the reserve currency in the world rather than see the retreat and decline that we might otherwise experience.”
It’s not about Circle, Coinbase, or even crypto as we’ve come to know it. He is talking about architecture and about rebuilding U.S. financial plumbing with instruments that can travel the internet at the speed of content, while still flying the U.S. flag.
“Today it’s an unregulated market… What we’ll do is make certain that everyone knows that stablecoins are backed by U.S. dollars and that those dollars are backed up by cash and short-term U.S. treasuries.”
This is the crux of it: stablecoins, if compliant, become extensions of the Treasury market. Not competitors to banks. Not challengers to the Fed. But demand engines for short-dated debt, giving the U.S. a new distribution channel for dollar-denominated instruments.
Hagerty even points out that by the end of this decade, U.S.-based stablecoin issuers could be the largest holders of Treasuries in the world. That’s a very sober projection based on the compounding demand for programmable dollars.
So What Does This Mean for Tether?
Well, that depends on what kind of role you believe Tether wants to play.
If Tether wants to participate in the U.S. regulated market, then a new entity (USDT2 or some variant) will likely need to emerge. Fully backed by regulated banks, audited reserves, and subject to oversight. In that scenario, Tether becomes indispensable infrastructure.
But there’s also a parallel world. One where Tether continues to dominate outside the U.S. precisely because it is not entangled in U.S. compliance frameworks. A dollar proxy with looser rules, but deeper reach. For millions of users across Asia, Africa, and LATAM, that’s not a bug. It is the feature.
Hagerty, Lummis, and others are setting the stage for a multi-tiered system:
Compliant, onshore stablecoins that serve Wall Street and state-sanctioned retail access
Unregulated, offshore stablecoins that do the same thing U.S. dollars always did; circulate as hard money in unstable economies
Tether currently operates as an offshore issuer, dominating global markets with liquidity, speed, and ubiquity. Its reserves already include a massive amount of U.S. Treasuries over $115 billion. But despite that alignment with the dollar, it’s still not U.S.-based, not U.S.-regulated, and not part of the Washington-centric compliance apparatus that GENIUS seems to favor.
And here’s the most revealing line:
“I’d far prefer a benign stablecoin issuer to the CCP or other sovereign nations.”
Hagerty is saying the quiet part out very loud: stablecoins are now a geopolitical lever. One that can be used to counter China’s digital yuan, displace euro-denominated trade zones, and fill vacuum markets with digital dollars that always settle.
Whether you like stablecoins (and their ever-so-eager regulators) or not, this is the game. And if the Genius Act passes, it will make that game official U.S. policy.
Who gets the early mover advantage?
Will Circle’s IPO become a moat or a liability?
Can the onshore model offer yield without getting torpedoed by securities law?
Will Tether split itself to serve both sides of the regulatory membrane?
In a world where every layer of finance is being redrawn, it’s not enough to be dominant. You have to be adaptable. Tether has survived and thrived through every regulatory wave so far. This next one could define how much of the future it gets to write.