When President Trump signed the GENIUS Act into law on Friday, declaring it would “cement American dominance of global finance and crypto,” he revealed far more than enthusiasm for digital assets. The legislation, seemingly designed to regulate the $250 billion stablecoin market, represents the most significant challenge to Federal Reserve authority since the institution’s founding in 1913. What appears to be regulatory transparency for cryptocurrency markets is, in reality, the infrastructure for an alternative monetary system that could render traditional central banking obsolete. The timing of this legislative triumph reflects the coordinated nature of the assault on traditional monetary policy. As President Trump intensifies his public criticism of Fed Chair Jerome Powell, demanding interest rates be slashed to 1 per cent, the GENIUS Act provides the technical framework for bypassing the Federal Reserve entirely. This is not a coincidence but a strategy. The legislation requires stablecoins to be backed by liquid assets such as US dollars and short-term Treasury bills, creating a parallel monetary infrastructure that operates independently of traditional banking oversight while maintaining the appearance of dollar stability.

This offensive becomes explicit when examining the legislation alongside the simultaneous passage of the Anti-CBDC Surveillance State Act, which prohibits the Federal Reserve from issuing its own digital currency. This combination creates a deliberate asymmetry as private entities gain the ability to issue dollar-backed digital currencies. At the same time, the central bank is explicitly prevented from competing in the digital monetary space. The result is a privatisation of monetary issuance that would have been unthinkable even five years ago, yet now proceeds with bipartisan support and market celebration.

The Federal Reserve’s response reveals the institution’s recognition of its diminishing relevance. The legislation assigns oversight of stablecoin issuers to the Fed and the Office of the Comptroller of the Currency. However, this shared authority masks a fundamental shift in monetary control. Unlike traditional monetary policy, which operates through interest rate adjustments and reserve requirements, stablecoin regulation enables direct control over money supply through reserve composition requirements and redemption mechanisms. The Fed finds itself regulating its own replacement, a position that would be absurd if it were not so strategically deliberate.

As one analyst noted, the GENIUS Act “doesn’t just chip away at the Federal Reserve’s powers in overseeing monetary policy and maintaining financial stability, it triggers subsidence”. The metaphor is apt: this is not gradual erosion but structural collapse. The Federal Reserve’s independence, long considered unchallengable by economists and financial markets, faces its most serious challenge since the institution’s creation through the combination of political pressure from President Trump, legislative constraints through the Anti-CBDC Act, and competitive pressure from private stablecoin issuers. Each element reinforces the others, creating a perfect storm that could render traditional monetary policy ineffective within the current decade. This systematic undermining of central bank authority enables something unprecedented—corporate monetary sovereignty. Private entities now gain the power to issue currency based on their control over essential infrastructure. The transformation becomes clear when examining the legislation’s provisions alongside the broader energy infrastructure pivot we have witnessed in recent weeks, where energy companies abandon traditional utility models to become AI infrastructure providers. The GENIUS Act enables these same companies to issue their own dollar-backed currencies for data centre transactions, directly linking infrastructure control and monetary authority. Talen Energy’s $3.5 billion acquisition of gas-fired power plants takes on new significance when viewed through this lens: the company is not merely expanding electricity generation capacity, but positioning itself to become a monetary issuer in the emerging AI economy. The same companies that control AI computation and energy generation will soon control the monetary systems that facilitate transactions within their economic domains, creating unprecedented concentrations of economic power.

Furthermore, commercial banks face an existential crisis that extends far beyond the deposit flight scenario already discussed. The GENIUS Act enables stablecoin issuers to offer payment services that compete directly with traditional banking while operating under a regulatory framework designed for their success rather than their constraint. When major corporations can issue their own dollar-backed currencies for specific economic sectors—as energy companies are positioning to do for AI infrastructure—the traditional role of banks as monetary intermediaries becomes redundant. Unlike money market funds, the legislation’s requirement that stablecoins cannot pay interest reveals the careful balance between providing monetary functionality and avoiding direct competition with traditional banking products. Yet this distinction will prove meaningless as corporate issuers develop sophisticated financial products around their monetary platforms.

The market response to the legislation reveals the extent to which investors understand its transformative implications. Cryptocurrency markets surged past $4 trillion for the first time following the bill’s passage, while traditional banking stocks remained essentially unchanged. This divergence reflects recognition that the GENIUS Act creates winners and losers in the monetary system rather than simply providing regulatory clarity for existing arrangements. The winners are those who control essential infrastructure; the losers are traditional financial institutions and, ultimately, traditional oversight of monetary policy.

Geopolitically, as China advances its digital yuan and Europe prepares to launch the digital euro by October 2025, the GENIUS Act positions American private entities to compete in the global digital currency race without requiring government infrastructure or central bank coordination. This privatised approach to monetary competition enables the United States to maintain dollar dominance while avoiding the surveillance and control mechanisms that characterise state-issued digital currencies. Yet it achieves this by surrendering democratic control over monetary policy to private corporations, a trade-off that may prove more costly than the alternatives it seeks to avoid.

Something deeply unsettling about this trajectory extends beyond concerns about financial stability or regulatory oversight. The same entities that will control AI infrastructure and energy generation are positioning themselves to control monetary systems, creating unprecedented concentrations of economic power that operate beyond traditional democratic accountability. The GENIUS Act provides the legal framework for this concentration while maintaining the fiction of regulatory oversight, enabling private entities to exercise sovereign powers without sovereign responsibilities.

The monetary revolution is no longer theoretical speculation; it is operational reality accelerating through legislative mandate. The GENIUS Act represents more than regulatory innovation or technological advancement; it signals the emergence of a new form of economic sovereignty where control over essential infrastructure determines monetary authority. Companies that successfully deploy comprehensive stablecoin systems gain compounding advantages in transaction processing, monetary policy transmission, and economic surveillance capabilities, creating self-reinforcing cycles of increased influence and control that won't be easy to reverse once established.

The actual question is not whether this transformation will occur, but whether traditional institutions can maintain any meaningful oversight over the private entities that will soon control the monetary infrastructure of the digital economy. The GENIUS Act provides the answer: they cannot; perhaps more troubling, they have chosen not to try. We are witnessing the voluntary abdication of one of the government’s most fundamental responsibilities—control over the monetary system—in favour of private corporate sovereignty. The implications of this choice will define economic and political relationships for decades to come, long after the current enthusiasm for cryptocurrency innovation has faded into a historical footnote.