America’s Digital Dollar - Without the Fed: How Stablecoins Won Round One

Washington didn’t ship a retail "Fedcoin." Instead, it passed a federal stablecoin law and left the digital-dollar distribution to regulated private issuers - with reserves anchored in cash and U.S. T-bills. Meanwhile, Congress is moving to block a retail CBDC, and the Fed is sticking to research/wholesale experiments.

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The reveal: you already have a digital dollar (just not from the Fed)

For years, investors asked "When is Fedcoin coming?" In July 2025, the White House answered a different question: it signed the GENIUS Act—a federal framework for payment stablecoins, not a central-bank wallet. The law codifies 1:1 redemption, high-quality liquid reserves (cash/T-bills), and regular transparency, turning today’s dominant dollar tokens into a regulated “fiat on rails.”

At the same time, the House advanced the Anti-CBDC Surveillance State Act, designed to bar the Fed from issuing or piloting a retail CBDC. Even without a final Senate outcome, Chair Jerome Powell has been blunt: the U.S. is “nowhere near” adopting a CBDC, and a retail version would require explicit Congressional authorization. Translation: a public-facing “Fedcoin” isn’t on the runway.

Revelation: America’s digital dollar arrived via regulated, reserve-backed stablecoins, not a retail coin from the Fed.

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Why stablecoins won Round One

Politics & privacy. A retail CBDC concentrates data and control in the state, politically fraught in the U.S. By contrast, private issuers handle wallets and distribution, regulators police reserves and disclosures, and the Fed keeps to the pipes. That’s the GENIUS Act’s compromise.

Market reality. Stablecoins already move dollars 24/7 at internet speed. Crucially, their reserves have shifted toward short-dated Treasuries, tying stablecoin growth directly to T-bill demand. Estimates now put dollar-stablecoin reserves as meaningful buyers of the front end—roughly low-single-digit percentages of the T-bill market and rising under a clear regime.

Fresh proof: Tether just announced plans for a U.S.-domiciled coin (USAT) structured to comply with GENIUS, highlighting how issuers are repositioning into the new framework.

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What the new regime actually requires

The GENIUS Act establishes a lane for banks and federally licensed nonbanks to issue payment stablecoins under federal supervision. Core planks:

1:1 redemption at par,

eligible reserves (cash, T-bills, and similarly liquid instruments),

regular reserve disclosures/audits, and

prompt supervisory oversight to manage run risk.

Effective dates are tied to implementing regulations (or 18 months after enactment), signalling a phased rollout but law on the books now.
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The Fed’s lane: wholesale rails, not a consumer wallet

The New York Fed’s Project Cedar continues as a multiphase research track into wholesale/cross-border settlement—think interbank FX PvP experiments—not a public wallet. This is plumbing, not product. Combined with Powell’s stance on retail CBDC, the message is consistent: research yes, retail coin no.
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Liquidity mechanics: pegs, redemptions, and the T-bill bid

Stablecoins now look a lot like tokenized demand liabilities backed by short-term sovereign paper.
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• When flows are positive, issuers buy T-bills; when redemptions spike, they tap cash or sell bills.
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• In calm periods, this quietly adds a bid to the front end; in stress, it can become a pro-cyclical seller unless buffers are robust.
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• GENIUS mitigates tail risk by forcing high-quality reserves and frequent disclosures, making the peg more durable, according to the Federal Reserve Bank of Kansas City.

A live macro angle: as stablecoin supply scales, so could structural demand for T-bills—though, as the Kansas City Fed notes, that demand may displace other buyers at the margin rather than add purely new demand.

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Risk map (what could still break)
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1. ‍Run dynamics. A rumor, exploit, or policy shock can trigger fast redemptions; even T-bills need plumbing and time. Transparency and cash buffers matter.
   
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2. Issuer concentration. If a handful of issuers dominate, an operational or legal hit to one becomes systemic for crypto-dollar liquidity. GENIUS helps, but concentration risk remains.
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3. Banking linkages. Stablecoins live at the boundary of shadow banking and regulated money. Supervision must nail custody, reconciliations, and instant redeemability to avoid a mismatch crisis.
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4. Cross-border friction. Dollar tokens move faster than cross-border compliance. Expect skirmishes over KYC/AML, sanctions, and capital-flow controls as usage spreads.
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Read The GENIUS Act of 2025: Stablecoin Legislation Adopted in the US to learn more.

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Winners & losers

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Winners

The U.S. dollar. A regulated, private distribution model spreads USD globally without a state wallet, and channels demand into T-bills.

Treasury market (front end). A growing, rule-bound buyer cohort at the T-bill tenor adds depth - still small, but non-trivial and scaling.

Compliant fintech & exchanges. Clear federal rules lower friction for payments, settlement, and custody - and for plugging stablecoins into mainstream commerce.

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Potential losers

Retail CBDC. Politically blocked in the House; Powell says no under his leadership and Congress must authorize any retail model.

Slow banks. Institutions that don’t integrate 24/7 token rails may cede payments revenue and deposits to nimbler issuers/partners. (Banks are watching closely.) Check out Jurica Dujmovic's post on MarketWatch titled Why banks are afraid you’re going to ditch them for stablecoins, which argues "Regulated U.S.-dollar stablecoins could become as ordinary as money-market funds".
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What to watch next

Licenses & charters: Which nonbank issuers get federal charters first—and how stringent are their reserve attestations?

Reserve mix & scale: Monthly disclosures: how much cash vs. T-bills, and how quickly balances grow under GENIUS.

Interoperability: Bridges/standards across chains that make tokens true payment utilities (not just exchange chips).

Hill dynamics: The Anti-CBDC bill’s Senate journey and any follow-on AML/KYC tweaks that reshape distribution.

Issuer repositioning: New U.S.-domiciled launches (e.g., USAT) built explicitly for GENIUS compliance.

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Stablecoins + T-Bills = The U.S. Digital Dollar, For Now

So: When will the Fed release a digital dollar? The answer is: it won’t - because it doesn’t need to. The U.S. has effectively upgraded the dollar by regulating private, reserve-backed stablecoins and letting the market handle distribution, while the Fed keeps to wholesale research and Congress keeps a retail CBDC at arm’s length. For investors and operators, the practical effects - T-bill demand, 24/7 rails, programmable cash - matter far more than whose logo sits on the wallet.

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