The Bitcoin Coverage Institute (BPI) has launched a brand new coverage proposal for the USA geared toward establishing what it calls “stablecoin supremacy.” The proposal, revealed on Wednesday, is structured round 5 coverage areas and comes on the heels of the already-enacted GENIUS Act.
Bitcoin Coverage Institute Warning
On the heart of BPI’s argument is the declare that regulated stablecoins may help prolong US oversight over offshore greenback markets. Within the institute’s view, doing so wouldn’t solely cut back systemic dangers but in addition blunt what it frames as China’s push into digital foreign money.
The BPI describes how offshore banks can create dollar-denominated credit score on their very own, seize the income from intermediation, and depend on the Federal Reserve (Fed) as a sort of implicit backstop when the system strains.
BPI characterizes this setup as a severe vulnerability for the US economic system. Due to that, the institute argues that regulated stablecoins provide the USA a device for restructuring the underlying dynamic.
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Underneath the GENIUS Act, signed into regulation in July 2025, BPI says stablecoin issuers should preserve 100% reserves in devices corresponding to Treasury payments, Treasury repo, or insured deposits. The regulation additionally prohibits issuers from lending towards these reserves.
BPI says the result’s that when a overseas particular person or company holds a GENIUS-compliant stablecoin as a substitute of putting funds in a Eurodollar deposit, the related Treasury safety sits on the steadiness sheet of a US-regulated entity moderately than feeding the offshore system’s means to multiply credit score.
In BPI’s framing, the greenback worth can transfer around the globe, however the reserve stays “residence,” decreasing what it calls the exterior vulnerability dimension of the Triffin Dilemma.
Stablecoin Supremacy Blueprint
BPI additional hyperlinks the stablecoin case to broader aggressive pressures in digital property. It notes that China’s digital yuan now pays curiosity to holders and that China’s Cross-Border Interbank Fee System processes transactions throughout 190 nations.
The institute additionally factors to Europe’s MiCA regime, arguing it gives a framework for euro-denominated stablecoins that’s, in some respects, extra superior than present US implementation.
Taken collectively, BPI says these developments weaken American affect over the “rails” the place cash truly strikes—an space BPI calls each probably the most contested and most fragile a part of greenback dominance.
To reply, the institute proposes a framework to advance stablecoin supremacy throughout 5 coverage areas. First, it requires hardening GENIUS Act implementation by constructing a backstop structure.
BPI describes this as creating dedicated repo traces with major sellers and establishing a path to Federal Reserve Standing Repo Facility entry, with the aim of constructing compliant stablecoins extra engaging than offshore alternate options.
Second, BPI proposes that the USA export stablecoins moderately than Eurodollar deposits in worldwide commerce settlement. The goal, in response to the institute, could be to drag Treasury demand again onshore and eradicate what it describes because the offshore credit score multiplier on marginal greenback flows.
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Third, BPI argues for a charge and rewards strategy that enables regulated stablecoins to compete with interest-bearing Eurodollar deposits and even China’s digital yuan—whereas nonetheless staying inside the GENIUS Act’s statutory curiosity prohibition.
Fourth, the proposal addresses decentralized finance (DeFi) dangers. BPI warns about DeFi credit score multiplication and requires smart-contract-level restrictions and enforcement “chokepoints” to make sure unregulated protocols can not replicate the Eurodollar multiplier on blockchain networks.
Lastly, BPI says the US ought to protect overseas foreign money sovereignty by supporting native financial techniques alongside stablecoin adoption. The institute frames this as a approach to make sure stablecoin integration acts as shared financial improvement moderately than monetary coercion.
Within the institute’s view, these objectives might be achieved with out issuing extra sovereign debt to overseas governments or increasing the Federal Reserve’s steadiness sheet.
Featured picture from OpenArt, chart from TradingView.com
