Although the US Dollar Index (DXY) is still struggling to break through 100 points, Donald Trump’s administration thinks that global demand for the dollar is strong and only growing.
And the White House has given up hope on legislation focused on the “digital dollar.”
Related: Explained: What is a stablecoin?
It was in July 2025 that Trump signed the National Initiative to Create and Guide Stablecoins for the United States (GENIUS) Act. The purpose of the legislation is to establish a stablecoin pegged to the US dollar.
As the name suggests, a stablecoin tries to stabilize its value by pegging it 1:1 to the US dollar. Since a USD-pegged stablecoin has the same value as a dollar, it is also called a “digital dollar”.
The GENIUS Act mandates stablecoin issuers to back their stablecoins with dollar reserves made up of high-quality liquid assets like US Treasury bills.
Leading stablecoin issuers Tether and Circle are actually the largest holders of US Treasury bills.
But USD-pegged stablecoins face a major challenge on another legislative front as neither the banking nor crypto industries appear ready to compromise on stablecoin rewards in clear legislation.
The current draft contains provisions that prohibit crypto-platforms from offering rewards to stablecoin holders so that these platforms do not offer what would in fact be unregulated bank deposits.
Since a stablecoin has the same value as a dollar, banks fear that customers will transfer their deposits to crypto platforms in search of rewards (higher than the interest offered by banks). The crypto industry says the banks are acting anti-competitively.
Both Trump and Treasury Secretary Scott Besant have been pushing both sides to reach a compromise, but it has so far been at a standstill.
Patrick Waite, executive director of the President’s Council of Advisors on Digital Assets at the White House, said on March 11 that in the noise surrounding the rewards debate, one should not forget that stablecoins compliant with the GENIUS Act will “really lead to an influx of deposits.”
As international demand for US dollars is high, foreigners must exchange their local currency for a stable currency from a US-based issuer.
