Dollar's Digital Makeover: Is Trump's Plan on Track?

Trump's vision for upgrading the U. S. payment system is in motion, but the finish line is still far off. The GENIUS Act, aimed at modernizing the outdated financial infrastructure, is a significant part of his plan. Trump has been vocal about his support for the crypto industry, praising its rapid growth and potential to revolutionize the financial system. The former president believes that stablecoins can help strengthen the dollar's global standing. He has also emphasized the importance of not letting the dollar's value decline, a concern that has gained attention as the dollar's value has fluctuated in recent years. However, the relationship between the dollar and Bitcoin has been inverse, with Bitcoin's value often rising when the dollar falls. The Treasury Department has taken steps to implement the GENIUS Act, seeking input on how to regulate stablecoins and their issuers. This is a crucial first step towards establishing a framework that allows banks and payment firms to issue stablecoins under federal oversight. While the GENIUS Act focuses on upgrading the payment system without creating a central bank digital currency (CBDC), Trump has also banned the exploration of a CBDC. This policy direction is clear, but the details of implementation are still being worked out. The payment landscape is evolving, with both traditional and crypto-based systems making strides. Legacy instant payment systems like FedNow and RTP are processing billions in transactions, while crypto rails offer advantages like 24/7 uptime and programmability. The competition is not just about speed but also about integration into everyday commerce. Card networks like Visa and Mastercard are expanding their support for stablecoin settlements, enabling the movement of stablecoins into acquirer ledgers without changing the consumer checkout experience. This integration is a significant step towards making stablecoins a viable option for settlements. However, the final rules for the GENIUS Act are not expected until 2026, and even then, the adoption of stablecoins for settlements will likely be a gradual process. The outcome will depend on various factors, including bank access, capital and liquidity treatments, and how card and acquirer networks price different payment corridors. In the end, Trump's plan may not result in a complete replacement of legacy payment systems but rather a multi-rail stack where stablecoins and tokenized deposits handle settlements in the background. This approach could allow Trump to claim that he pushed the system towards crypto rails while maintaining the consumer experience.