The U.S. Dollar Faces Its Biggest Shakeup in 60 Days

Unprecedented Change on the Horizon

America’s financial system is experiencing sweeping transformation. A remarkable series of events—including landmark crypto legislation, China’s major reduction in U.S. Treasury holdings, and escalating friction between President Trump and Federal Reserve Chair Jerome Powell—signals a pivotal shift for the U.S. dollar and the future of global finance.

Congress Passes Groundbreaking Crypto Legislation

The GENIUS Act and More

• Congress passed the GENIUS Act, the first U.S. federal framework for regulating dollar-backed stablecoins. President Trump signed the bill into law, calling it a “historic” piece of legislation that ushers digital currency into a new era.
• The act sets strict requirements: stablecoin issuers must be 100% backed by liquid U.S. dollar assets or short-term Treasuries, with mandatory monthly public disclosures and robust consumer protections.
• The GENIUS Act is joined by two companion bills:
  • The CLARITY Act, which transfers jurisdiction for digital asset regulation and clarifies agency authority over crypto exchanges and brokers.

• The CBDC Anti-Surveillance State Act, which prohibits the Federal Reserve from issuing a retail central bank digital currency without congressional approval, effectively banning a U.S. government “digital dollar” CBDC.

Why it matters:
Advocates say these changes bring regulatory clarity, encourage the U.S. to maintain leadership in fintech, and respond to global competition, especially from China’s digital yuan and other BRICS initiatives.

China Dumps U.S. Treasuries to 16-Year Low

• China, America’s largest foreign creditor for many years, reduced its holdings of U.S. Treasuries to $757 billion in April 2025, the lowest since March 2009 and now ranks behind Japan and the UK.
• This sale is part of a long-term strategy: diversifying foreign reserves beyond the dollar, bolstering gold holdings, increasing use of the yuan in global trade (including via Belt and Road), and insulating China from U.S. economic sanctions.

• The reduction aligns with Beijing’s push for broader economic independence and efforts to promote the yuan internationally, supporting both its currency and its foreign policy objectives.

Implications:
While China remains a major holder, its steady sales draw global attention to the sustainability of U.S. debt financing and the dollar’s status as the world’s reserve currency.

Trump vs. the Fed: The Power Struggle Intensifies

• President Trump has escalated public criticism of Federal Reserve Chair Jerome Powell, calling him “stupid” and blaming him for weakening the U.S. economy through high interest rates.
• Trump has repeatedly suggested Powell should resign and has expressed interest in appointing someone more aligned with his push for aggressive rate cuts, especially if re-elected. Despite speculation about Powell’s job security, legal hurdles make a sudden firing unlikely before his term ends in May 2026.
• Trump’s criticisms underscore longstanding tensions between the executive branch and the traditionally independent central bank, particularly over the direction of interest rates.

The Digital Dollar Goes On-Chain

• The GENIUS Act clears the way for regulated, dollar-backed stablecoins, enabling a digital form of the U.S. dollar that is fully backed by actual dollars or Treasuries.
• This approach is presented as a distinct alternative to central bank digital currencies: designed for transparency, consumer protection, and market-driven innovation, not for increased government surveillance.
• Stablecoins issued under this law are expected to make the U.S. dollar more adaptable and useful in global digital markets, supporting dollar dominance in a rapidly evolving landscape.

Market Impact: Crypto Leaders, Gold, and DeFi Technologies Rally

• The runup to and passage of these crypto laws have coincided with significant moves in financial markets:
  • Gold prices neared all-time highs and other safe-haven assets like silver remained elevated.
  • Major cryptocurrencies surged on optimism about U.S. regulatory clarity and the dollar’s official move into digital form.
  • DeFi Technologies (DEFT), a significant player in digital asset investment and management, reported Q1 2025 revenues of C$62.7 million (US$43.1 million) and a dramatic increase in net income. Analysts project continued growth, and the stock has delivered strong annual returns—outpacing many major assets.

The Big Picture

• These unprecedented developments represent the most significant change to the dollar system since the U.S. left the gold standard or the Federal Reserve was established.
• America’s response to global monetary competition is now being shaped by a digital dollar, regulatory innovation, and shifting international alliances.
• The next 60 days are primed for continued disruption, with the financial world watching closely for the long-term effects on the U.S. dollar’s dominance and the broader global order.