Author: losingingle Source: X, @losingle
I have read "The Genius Act and the New East India Company: How the US Dollar Stablecoin Will Challenge the Existing Legal Money System and State Form" by Rickawsb. In the grand narrative of the "Genius Act" and the "New East India Company", a future driven by the US dollar stablecoin and subverting the global financial order is vividly portrayed. It predicts a "currency tsunami" sweeping the world, which will end the central banks of weak countries and use open financial networks to reduce the dimensionality of closed systems. I am personally calmer. When we turn our eyes back from the exciting prophecy to the cold reality, we will find that the torrent of this revolution is hitting a "wall of silence" built by vested interests, global regulations and national sovereignty.
Act 1: Realistic resistance to grand narratives
Although legislative breakthroughs such as the "Genius Act" have provided unprecedented legitimacy for stablecoins in the United States, it is still full of challenges to leverage network effects and accelerate the process of global adoption.
I. The solid fortress of traditional finance
The "old players" of the existing global cross-border payment system - the banking alliance centered on SWIFT and agency behavior - are not passive. They are the most determined defenders of their own system because their business model is precisely based on "inefficiency" and "friction".
Profit is friction: The high fees of traditional wire transfers, the opaque exchange rate differences, and the interest income brought by funds in transit are the profit cornerstones of banks' cross-border business. A stablecoin system that runs 24/7 and has almost zero cost is tantamount to revolutionizing itself.
Defensive innovation: Faced with threats, old players choose "improvement" rather than "revolution". Whether it is the GPI service launched by SWIFT to improve efficiency, or the JPM Coin run by JPMorgan Chase on its internal network, its essence is to absorb the advantages of new technologies to strengthen its own moat and control disruptive forces within a controllable "walled garden" rather than embracing a "permissionless" public network.
Trust and compliance barriers: Institutional trust built over decades and the costly global anti-money laundering (AML) and counter-terrorist financing (CFT) compliance system are the most powerful barriers to traditional finance. Any new player who wants to enter must cross this high wall built by history and regulations.
2. The maze of global regulation and the dilemma of the "last mile"
Stablecoin issuers hold the "birth permit" issued by the United States, but find that the world map is not a smooth road, but a complex maze composed of countless independent jurisdictions.
Fragmentation of licenses: A US license is not a global pass. To conduct business in Europe, Asia, and Africa, issuers must overcome dozens of different regulatory systems such as the EU's MiCA Act, the Monetary Authority of Singapore, and the Japanese Financial Services Agency one by one. This is a long and time-consuming and costly journey.
The lifeblood of the "last mile": The value of stablecoins is ultimately reflected in whether they can be freely exchanged with local legal currencies. However, the deposit and withdrawal channels (On-ramp/Off-ramp) of this "last mile" are firmly in the hands of local banks in various countries. Due to risk aversion and regulatory pressure, local banks are generally cautious about cooperating with crypto companies, which makes it difficult for stablecoins to truly penetrate into the daily economic activities of the public.
The gap between technology and the market: For the vast majority of ordinary people, understanding concepts such as private keys, gas fees, and wallet security is still too high a threshold. This makes the early adopters of stablecoins still limited to crypto native users, specific groups seeking capital hedging, and some small and medium-sized traders, far from reaching the vast mainstream market.
Third, the unshakable sovereignty red line
This is the most fundamental resistance. The prudence of regulators in various countries does not stem from the incomprehension of technology, but from the instinctive defense of the core power of the country.
Monetary sovereignty is the bottom line: Allowing a digital currency backed by a foreign country to prevail in the country is equivalent to actively giving up the country's seigniorage and monetary policy independence, which is tantamount to handing over the economic lifeline to others. This is unacceptable for any sovereign state.
Financial stability is the red line: Regulators must guard against the possible risk of runs on stablecoin issuers to prevent the shock waves from being transmitted to their own financial systems. Therefore, the requirements for their reserves and audit transparency will only become more and more stringent.
Capital control is a line of defense: For many emerging markets, capital control is an important line of defense for maintaining economic stability. The near-perfect capital outflow capacity of stablecoins is precisely the deepest fear of regulators, and they will spare no effort to plug the relevant loopholes.
Conclusion: From "tsunami" to "infiltration", a long tug-of-war
The resistance of reality determines that the global popularity of stablecoins will not be a devastating "tsunami", but more like a long and tortuous "infiltration war". Its path is not a complete subversion in the grand narrative, but a more pragmatic and circuitous one:
Starting from the gray area: In areas where supervision is unclear and traditional financial services are not in place (such as P2P transactions and trade settlements in high-risk areas), stablecoins will take root and sprout with their efficiency advantages.
B2B takes precedence over B2C: Compared with changing the payment habits of hundreds of millions of consumers, solving the pain points of cross-border settlement between enterprises (especially small and medium-sized enterprises) is a more direct breakthrough with less regulatory resistance.
Waiting for the emergence of variables: The future breakthrough point may come from a sudden economic crisis (forcing people to choose stablecoins for risk aversion), or a technology giant with a large number of users (such as Apple, Meta) forcibly integrating compliant stablecoins into its ecosystem, thereby forcing global supervision to adapt to the new pattern.
This is a global tug-of-war over interests, power and trust. The grand narrative points us in the right direction, but the road to the future is far more rugged and long than imagined.
Act 2: The short-term conspiracy of "joining SWIFT"
Since it is impossible to break through the city wall from the outside, the wisest strategy is to be invited into the city. For players like Circle, the best strategy in the short term is not to challenge SWIFT, but to deeply integrate with it. This is a brilliant "conspiracy", a win-win start.
Benefits of stablecoins: By seamlessly integrating USDC into SWIFT messages familiar to banks (such as those based on the ISO 20022 standard), Circle will instantly gain: the world's largest distribution network (11,000+ financial institutions). The highest level of trust endorsement. The solution for the "last mile" fiat currency exchange. This is equivalent to finding a "VIP channel" for stablecoins to enter the mainstream financial world, solving the problem of survival and development.
SWIFT's benefits: Facing the challenges from blockchain, SWIFT is also under pressure to innovate. By incorporating stablecoins, an efficient digital asset, into its system, SWIFT can not only enhance the service capabilities of its network (such as providing near-instant settlement options), but also transform potential disruptors into collaborators within the ecosystem, consolidating its core position as a global financial information hub.
At this stage, the relationship is symbiotic. Stablecoins reach the world with the help of SWIFT's track, and SWIFT uses the technology of stablecoins to maintain its advanced nature.
Act III: The long-term vision of "replacing SWIFT"
However, "joining" is only a means, not an end. In the minds of stablecoin giants, the long-term vision of "replacing" SWIFT has never been extinguished. The essence of this game is to use the resources obtained in the first stage to build a parallel universe that will eventually surpass the old system.
The dynamic evolution of the game will unfold as follows:
Establish native advantages: While serving traditional finance through the SWIFT channel, Circle will vigorously develop its native, public chain-based protocols (such as CPN). This native network will focus on demonstrating its unique advantages over SWIFT: extremely high programmability (smart contracts), seamless integration of the DeFi ecosystem, and native support for emerging digital assets (RWA).
Dual tracks in parallel, differentiated market: The market will see a dual track situation.
SWIFT track: Serves traditional, standardized large-scale interbank clearing. It is stable and compliant, but lacks flexibility.
Native public chain track: Serves innovative, programmable, 24/7 uninterrupted digital financial applications. It is flexible, efficient, and represents the future.
Transfer of gravity: With the increasing prosperity of the native public chain ecosystem - developers pouring in, innovative applications emerging in an endless stream, and user experience continuously optimized - the gravity of the market will gradually shift from the SWIFT track as a "bridge" to the native public chain track as a "destination". When companies find that trade financing and supply chain management through native tracks can save more costs and create more value, they will naturally migrate over.
The key to this game lies in whether stablecoin issuers can successfully transform the customers, capital and reputation obtained through "joining SWIFT" into nutrients that nourish the growth of their native networks.
Why is "joining SWIFT" the best solution in the short term?
If Circle's CPN (Cross-Chain Transfer Protocol) or similar protocols can be integrated with the SWIFT system, for example, allowing SWIFT's MT103 (single customer remittance) message to trigger an on-chain transfer of USDC, this will instantly solve many core pain points facing the industry:
Instant access to the world's largest distribution network: SWIFT connects more than 11,000 financial institutions in more than 200 countries and regions around the world. Through integration, USDC no longer needs to negotiate cooperation with banks one by one, but instantly accesses this unparalleled global network. This solves the problem of "new players cannot be promoted" discussed in the previous article.
Instantly obtain the highest level of trust endorsement: For mainstream financial institutions around the world, SWIFT is the "Bible" of cross-border payments. Any solution compatible with SWIFT standards will be automatically labeled as "compliant", "secure" and "trusted". This will greatly eliminate the doubts and fears of traditional finance about crypto assets.
Seamlessly solve the "last mile" problem: Banks are the ultimate gatekeepers for fiat currency deposits and withdrawals. If the circulation of USDC is integrated into the SWIFT workflow familiar to banks, banks no longer need to develop a completely new and uncertain crypto docking system. They can handle digital dollars within the existing framework, just like handling euros or yen. This greatly reduces the adoption threshold.
Become a definer of new standards: By working with SWIFT, especially under the framework of the next-generation payment standard ISO 20022, Circle can deeply participate in defining the industry standard for "how digital assets circulate through traditional financial tracks". Becoming a standard setter means having the power to define the rules of the game in the future.
For the blockchain industry, this means:
Massive capital influx: Institutional funds will have a compliant and convenient channel to enter the on-chain world.
Application scenario explosion: Enterprise-level applications such as trade financing, supply chain finance, and RWA (real world asset) transactions based on compliant stablecoins will emerge on a large scale.
Regulatory attitude softens: When encryption technology is proven to empower the existing system rather than just subvert it, the attitude of global regulators may shift from confrontation to cooperation.
The long-term vision and short-term dilemma of "challenging SWIFT"
The ultimate goal of CPN is undoubtedly to become a new generation of value transfer network that is superior to SWIFT. Its advantages are fundamental:
However, to independently build this network, we face all the obstacles we have discussed before: applying for licenses in each country, establishing banking partnerships, educating the market, and overcoming technical bottlenecks. This is a long process that takes years or even decades and consumes astronomical amounts of capital.
Strategic choice: Evolution from "plug-in" to "platform"
Therefore, the most sensible strategic path is not to choose one or the other, but a gradual evolutionary process:
Phase 1: Become the most powerful "plug-in" in the SWIFT ecosystem
Goal: Deep integration and seamless connection. Make USDC a new type of "digital asset" circulating in the SWIFT network.
Action: Cooperate with SWIFT to develop an interface based on the ISO 20022 standard, so that banks can complete the minting, destruction or transfer of USDC by sending a SWIFT message.
Benefits: Obtain a large number of users, funds and trust, and complete the original accumulation of capital and market. Don't die first, then seek development.
Phase 2: Establish a parallel "native network" and demonstrate its superiority
Goal: While gaining market share through SWIFT, vigorously develop native protocols such as CPN.
Action: Demonstrate the superiority of the native network for scenarios that SWIFT cannot meet, such as smart contract payments that require high programmability, DeFi applications, small-amount and high-frequency IoT payments, etc.
Strategy: Tell the market: "For traditional interbank remittances, you can continue to use SWIFT to call USDC; but if you want to implement more complex, automated, and lower-cost financial logic, please directly access our native network."
Phase 3: Transformation from "bridge" to "destination"
Goal: Make the native network a mainstream choice.
Path: When the native network ecosystem is prosperous enough, there are enough developers and applications, and the user experience is good enough, the market's focus will naturally shift from the SWIFT channel as a "bridge" to the CPN native network as a "destination". By then, the SWIFT channel may still exist, but it is no longer the core.
Conclusion:
In the short term, "joining" or "integrating" into the SWIFT system is the fastest path for the blockchain industry, especially leading players like Circle, to achieve explosive growth and gain mainstream recognition. This is not a betrayal of the ideal of decentralization, but a pragmatic strategy in the real world.
At the end of this century's game, SWIFT may not disappear, but its role may be downgraded from the only "highway" to one of the "national highways" among many road options. The real flow of value and financial innovation will occur on the new generation of value Internet based on public chains.
And the public chain has also found its own accurate positioning in this process. It is not to replace all centralized systems, but to serve as the ultimate arbitrator and cornerstone of trust in this game. It is the silent, reliable but indispensable "global notary office", providing an unalterable trust guarantee for the asset circulation and final settlement of the old and new worlds.
The future of stablecoins and SWIFT is a dynamic game from integration to competition. "Handshake and make peace" in the short term is a pragmatic move to maximize the interests of both parties, but this has accumulated enough power for the stablecoin giants to start a larger and deeper long-term competition. The result of this competition will redefine the underlying logic of global finance, and many public chains will be the most solid cornerstone of this new order.
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