Is US dollar hegemony 3.0 becoming a reality step by step?

Last week, the U.S. Senate passed the controversial "Genius Stablecoin Act". As long as it passes the House of Representatives and is signed by the President, this first law in U.S. history specifically tailored for the "on-chain dollar" will be officially born. For example: In the past, the hegemony of the U.S. dollar was like a game, starting from the initial "gold dollar" to the main task of "petrodollar", which lasted for nearly 80 years. Now, this bill is like a new "DLC" (expansion pack) in the game, opening up a new map for the U.S. dollar - blockchain.

With this bill, in the future, as long as it is the "digital twin brother" of the U.S. dollar (stable coins such as USDT and USDC), no matter which public chain it is placed on, it is equivalent to being officially "certified" by U.S. law, and the rules of the game of global finance have been reshuffled once again.

《Dollar Hegemony 3.0: Trump's "Decentralized" Conspiracy》 was originally published on January 29, 2025, telling the entire evolution story of the dollar hegemony - from the gold-stacked Fort Knox to the oil-surging Persian Gulf, and then to today's virtual blockchain world, how the United States step by step induces the world to actively accept the dollar as a "necessity".

After understanding these, you can not only grasp the future trends of regulatory policies, capital flows and international politics in advance, but also deeply understand why mastering the liquidity on the blockchain is to master the financial discourse power of the next era.

This article will make you realize that this "Genius moment" is really happening before our eyes.

Dollar Hegemony 3.0: Trump's "Decentralization" Conspiracy (Original Title)

Last Thursday, January 23, 2025, Trump signed an executive order in the name of "protecting economic freedom", banning the development of the US central bank digital currency (CBDC) and supporting private stablecoins instead. This decision seems contradictory, but in fact it continues the core logic of the US dollar hegemony for a hundred years:

I. Three Anchoring Revolutions of US Dollar Hegemony

1. Gold Dollar (1944-1971): The End of Physical Scarcity

World War II had just ended, and countries around the world urgently needed to rebuild their economies. At this time, the United States stepped onto the historical stage with its mountains of gold reserves. At the Bretton Woods Conference in 1944, an agreement firmly tied the dollar to gold: 1 ounce of gold was fixed at 35 dollars. In this way, the dollar was regarded by many countries as the most reliable reserve and settlement currency.

At that time, the US gold reserves once accounted for 75% of the world's total, which was very prosperous. But the good times did not last long: more dollars were needed all over the world to conduct trade and investment, which forced the United States to continue to export dollars, but it could not always maintain sufficient gold reserves. By 1971, the scale of US dollars in circulation around the world had exceeded 500 billion, but the US gold reserves were less than 8,000 tons out of 10,000 tons, and a large number of dollars could not be exchanged for gold at all. Faced with this pressure, then-US President Nixon simply announced: the dollar and gold were "decoupled", and the Bretton Woods system collapsed.

This scene also confirms the famous "Triffin Dilemma". When the US dollar has to meet the domestic economic needs of the United States and shoulder the responsibility of the global reserve currency, it is inevitably caught in a dilemma: it has to provide the world with sufficient US dollar liquidity, but it is difficult to maintain currency stability due to limited gold reserves. Although the "gold dollar" era has ended, until today, this experience still has accumulated a valuable foundation of global financial trust for the United States, and also laid the groundwork for the continuation of the subsequent US dollar hegemony.

2. Petrodollar (1974 to present): a cycle that binds the lifeline of industry

After gold and the US dollar "broke up", the United States urgently needed to find a new "anchor" for the US dollar, and this anchor is oil. In 1974, the United States and Saudi Arabia reached an arrangement called the "US-Saudi Agreement": a large amount of global oil trade is priced and settled in US dollars, and Saudi Arabia and other oil-producing countries will return these dollars to the United States to buy US bonds and invest in US financial markets. Thus, a closed loop called "oil → US dollars → US bonds" was officially formed and continues to this day.

As of 2023, about 80% of the world's oil trade is still denominated in US dollars, and the millions of barrels of crude oil that flow into the oil market from Saudi Arabia and other countries every day also inject a large amount of funds into the US dollar in disguise. From then on, the United States no longer needs to take out real gold to endorse the US dollar, but instead relies on oil, the "blood" of the industrial age, to maintain its status as a world currency.

However, when the US dollar became the "trump card" of almost all cross-border transactions, it also derived the "weaponization of sanctions" - as long as a country is cut off from the US dollar clearing channel or kicked out of the SWIFT system, the economic lifeline will be "cut off from the bottom of the pot". You may still remember:

• In 2000, Iraq announced that it would switch to the euro to settle oil exports, and soon after, the US-UK alliance launched a large-scale military operation.

• In 2022, due to the Ukrainian crisis, several major Russian banks were deprived of the right to use SWIFT, and international capital flows were greatly affected.

Many people therefore assert that the long-arm jurisdiction of the "petrodollar" is still in effect, and once the core interests of the United States in the energy and financial systems are touched, it will face huge sanctions pressure. Of course, there are broader geopolitical factors behind the Iraq War and the Russia-Ukraine conflict, which cannot be simply attributed to the "challenge to the dollar." But it is undeniable that the dollar's dominant position in oil trade and international finance has given the United States financial means that are superior to most countries. Because of this, it is also described as a "soft weapon" in contemporary international relations, playing a decisive role in the battlefield without gunpowder.

3. Crypto-dollar (from the 2020s): the invisible hegemony of the code world

Imagine such a scene: in a crowded digital exchange, the screen full of currency prices soaring up and down, and the most eye-catching one is still the stablecoin with "US" at the beginning and anchored to the value of the US dollar. Nowadays, people can easily convert euros, rubles and even Turkish liras into "on-chain dollars" without going through traditional banks.

Looking at the entire blockchain ecosystem, USDT, USDC and other US dollar stablecoins are like "digital greenbacks", accounting for about 90% of trading pairs. What's even more exaggerated is that some experts predict that by 2025, the average daily settlement volume of USDT may approach 53 billion US dollars, even surpassing the 42 billion US dollars in transaction flow created by the traditional payment giant VISA. In other words, the US dollar not only dominates the physical world, but also takes the express train of stablecoins in the virtual code kingdom to achieve "borderless dollarization".

Unexpectedly, behind this wave of encryption, we can also see the "overt conspiracy" of the Trump administration. He rejected the Federal Reserve's plan to issue CBDC (central bank digital currency) but gave a pass to the stablecoin launched by private institutions. In this way, he can claim "decentralization" and "technological neutrality" to avoid too much political controversy, and secretly strengthen the global penetration of the US dollar. Instead of letting the government digital currency cause concerns or rebounds, it is better to let the market promote the digitization of the US dollar on its own, so that users around the world are willing to invest in this new US dollar ecosystem.

The most ironic thing is that regions or individuals that have been sanctioned by the United States are sometimes using these stablecoins to circumvent financial blockades. Some Russian businessmen exchanged their rubles for USDT through over-the-counter transactions and used blockchain to complete cross-border payments or asset transfers. Traditional banking channels may be "cut off" by SWIFT, but transfers on the blockchain are still unimpeded. In this way, under the banner of "decentralization", the hegemony of the US dollar has not only not been weakened, but has quietly expanded in the code world.

2. Three Principles of Crypto-Dollar Hegemony

1. Network Effect: Use is Dependence

Imagine that you open a decentralized finance (DeFi) platform and are ready to pledge your own tokens to earn income. Most protocols will give priority to accepting US dollar stablecoins such as USDC and USDT - just as people prefer to carry US dollars when traveling internationally. Once you choose this path, you are "locking" yourself into the US dollar ecosystem: whether it is lending, payment or financial management, US dollar stablecoins have become the most convenient and widely accepted "circulation tool".

What's even better is that US dollar transactions on the blockchain are often not directly interfered with by traditional monetary policies. Even if the Fed raises interest rates, funds on the chain can still flow freely and transfer quickly. This snowballing network effect makes the US dollar a "standard configuration" in the crypto world - the United States does not need to negotiate with other countries first. As long as it allows companies like Circle (the issuer of USDC) to deploy smart contracts on various public chains, the US dollar will naturally become the "unified language" in the code world. Some scholars call this "protocol imperialism": when everyone is accustomed to using US dollar stablecoins for collateral, payment or settlement, the decentralized blockchain will quietly expand the sphere of influence of the US dollar.

2. Decoupling and reconstruction: weakening traditional control

Surprisingly, the emergence of stablecoins seems to have "bypassed" the United States' most powerful financial weapon, the SWIFT system, to some extent. In the past, the United States could freeze a country's global trading channels by depriving it of the right to use SWIFT; on the blockchain, peer-to-peer transfers can complete cross-border payments without going through SWIFT. Some people predict that by 2024, about 67% of cross-border on-chain payments will use US dollar stablecoins, which will invisibly weaken the United States' centralized control over capital flows.

But the story is not that simple. No matter how "decentralized" these stablecoins are, they are still anchored to the credit of the US dollar: as long as the Federal Reserve is willing to raise or lower interest rates, the cost of global capital will still be led. What's more, private institutions that issue stablecoins are not truly independent of the US legal system-in 2023, Tether froze $870 million in funds related to North Korea at the request of US officials. This action is enough to prove that the so-called blockchain freedom cannot get rid of the United States' actual control over the "credit of the US dollar". Once the United States wants to "show its sword", stablecoins may still become a means for them to strike their opponents.

3. Risk transfer: Firewall of the private sector

Another phenomenon worth noting is that institutions such as Tether (issuer of USDT) are often registered in offshore areas. For the United States, this is equivalent to setting up a "firewall" between supervision and responsibility: on the one hand, the United States can share the dividends brought by the global expansion of stablecoins; on the other hand, once a compliance or credit crisis breaks out, the US authorities can immediately distance themselves from the relationship, claiming that this is a violation of the private sector and has no direct connection with the government.

At the same time, many individuals or companies that cannot obtain US dollars in compliance can only make cross-border payments or financing through stablecoin channels. These people often have to pay a cost of funds that is much higher than the interest rate in the United States, such as a borrowing rate ranging from 4% to 11%, which is much higher than the ordinary 1.5% fixed interest rate of banks. Figuratively speaking, this is to collect an invisible "channel tax" for "people who cannot go through the front door". From the perspective of the United States, this will not only allow the dollar to continue to maintain its penetration into global trade and investment, but also shift the responsibility to private institutions at critical moments, which can be said to be "killing two birds with one stone".

Three, three ways to escape the crypto-dollar trap

1. Issuing sovereign stablecoins: competing for pricing power on the chain

If you want to seize a "place" for your own currency in the blockchain world, the first step is to launch your own sovereign stablecoin. Singapore's XSGD and Indonesia's IDRT have saved a lot of costs for cross-border payments. China's digital RMB has directly cooperated with Middle Eastern countries in oil payments through projects such as "mBridge", gradually reducing its dependence on the US dollar.

The key to this move is to maintain sufficiently transparent reserves and strict supervision, otherwise it may repeat the mistakes of "insufficient reserves and capital flight" of stable currencies in some countries. Only when the sovereign stable currency of a country or region can be widely used in cross-border trade, retail payments and even DeFi protocols can it form a real pricing influence in the blockchain ecosystem.

2. Build a regional digital currency alliance: Group together to disintegrate network effects

It is often difficult to resist the strong penetration of the US dollar on the blockchain alone, so countries or regions need to work together to build a regional digital currency alliance. Southeast Asia is trying to promote "payment interconnection" to allow member countries to use local stablecoins for direct settlement, with the goal of replacing a certain proportion of SWIFT channels within a few years; Latin America is also testing the "digital currency corridor" and has achieved cross-border transactions of billions of dollars.

These joint actions can form a network effect in the region that is sufficient to counter the US dollar stablecoin, making local or regional currencies gradually become the preferred choice for trade. However, in order to survive for a long time, all parties need to unify technical standards, improve the regulatory framework, and prevent the "reverse penetration" of US dollar stablecoins.

3. Reconstructing the international monetary order: from gold to multipolar anchors

When the petrodollar faces more and more challenges, the international community is also looking for new "anchors". Increasing gold holdings is one of the strategies. Many countries have pushed their gold reserves to a record high. Some people also suggest that a new monetary system backed by high-tech or key resources such as chips and rare earths may emerge in the future. However, whether the new anchoring model can truly break the dominance of the US dollar depends on the evolution of the international financial landscape.

Although the proportion of the US dollar in global reserve currencies continues to decline, in order to completely diversify, all parties need to establish a mature settlement network, mutual trust mechanism and pricing benchmark. If handled improperly, the United States may once again launch new variants such as the "tech dollar" and continue to dominate the rules of the game in the next round of financial competition through innovative means. The so-called "tech dollar" may include strengthening the US dollar's payment and settlement capabilities with technologies such as AI, big data, and smart contracts, and even promoting a "decentralized but regulated" US dollar chain ecosystem.

Conclusion: Hegemony is not dead, it just changes

From the gold in Fort Knox, to the oil tankers in the Persian Gulf, to the smart contracts on the blockchain, the United States has always been good at "binding the key resources of the times" and promoting the US dollar to the world in a seemingly "market-oriented" way.The gold dollaris backed by scarce metals,the petrodollarhas grasped the lifeblood of the industrial age, and todaythe crypto dollaris regarding the "blockchain ecosystem" as the next core resource: it uses decentralized technology and the efficiency of cross-border transactions to penetrate the US dollar into almost every corner of the chain.

Some people may question that since the crypto world claims to be "decentralized", why is it still dominated by the US dollar? The logic behind this is that the network effect and trust foundation of the US dollar are still irreplaceable, which makes it the "default currency language" on the chain. Once global users accept the US dollar stablecoin, it is equivalent to being included in the "expanded version" of the US financial system. This is the so-called "soft colonization": no force is needed, and there is no need to exert direct pressure. As long as you provide irresistible services and liquidity, countries around the world can be "captured" by the US dollar system without knowing it.

For other countries, this is both a crisis and an opportunity. Sovereign stablecoins, regional digital alliances, technical and institutional firewalls, and the exploration of new resource anchoring may all win them greater monetary autonomy. After all, "marketization" does not mean fairness. The core is who can control key resources and dominate rule-making. In this silent currency war, if you want to avoid passive involvement, you must be familiar with the rules of the game and make multi-party arrangements. As the Governor of the Indonesian Central Bank said: "The current competition for monetary sovereignty has shifted from gold to code - whoever controls the liquidity on the chain will have the upper hand in the global financial order."