The Bitcoin Policy Institute (BPI) has released a new policy proposal for the United States aimed at establishing what it calls “stablecoin supremacy.” The proposal, published on Wednesday, is structured around five policy areas and comes on the heels of the already-enacted GENIUS Act.
Bitcoin Policy Institute Warning
At the center of BPI’s argument is the claim that regulated stablecoins can help extend US oversight over offshore dollar markets. In the institute’s view, doing so would not only reduce systemic risks but also blunt what it frames as China’s push into digital currency.
The BPI describes how offshore banks can create dollar-denominated credit on their own, capture the profits from intermediation, and rely on the Federal Reserve (Fed) as a kind of implicit backstop when the system strains.
BPI characterizes this setup as a serious vulnerability for the US economy. Because of that, the institute argues that regulated stablecoins offer the United States a tool for restructuring the underlying dynamic.
Under the GENIUS Act, signed into law in July 2025, BPI says stablecoin issuers must maintain 100% reserves in instruments such as Treasury bills, Treasury repo, or insured deposits. The law also prohibits issuers from lending against those reserves.
BPI says the result is that when a foreign individual or corporation holds a GENIUS-compliant stablecoin instead of placing funds in a Eurodollar deposit, the relevant Treasury security sits on the balance sheet of a US-regulated entity rather than feeding the offshore system’s ability to multiply credit.
In BPI’s framing, the dollar value can move around the world, but the reserve stays “home,” reducing what it calls the external vulnerability dimension of the Triffin Dilemma.
Stablecoin Supremacy Blueprint
BPI further links the stablecoin case to broader competitive pressures in digital assets. It notes that China’s digital yuan now pays interest to holders and that China’s Cross-Border Interbank Payment System processes transactions across 190 countries.
The institute also points to Europe’s MiCA regime, arguing it provides a framework for euro-denominated stablecoins that is, in some respects, more advanced than current US implementation.
Taken together, BPI says these developments weaken American influence over the “rails” where money actually moves—an area BPI calls both the most contested and most fragile part of dollar dominance.
To respond, the institute proposes a framework to advance stablecoin supremacy across five policy areas. First, it calls for hardening GENIUS Act implementation by building a backstop architecture.
BPI describes this as creating committed repo lines with primary dealers and establishing a path to Federal Reserve Standing Repo Facility access, with the goal of making compliant stablecoins more attractive than offshore alternatives.
Second, BPI proposes that the United States export stablecoins rather than Eurodollar deposits in international trade settlement. The aim, according to the institute, would be to pull Treasury demand back onshore and eliminate what it describes as the offshore credit multiplier on marginal dollar flows.
Third, BPI argues for a fee and rewards approach that allows regulated stablecoins to compete with interest-bearing Eurodollar deposits and even China’s digital yuan—while still staying within the GENIUS Act’s statutory interest prohibition.
Fourth, the proposal addresses decentralized finance (DeFi) risks. BPI warns about DeFi credit multiplication and calls for smart-contract-level restrictions and enforcement “chokepoints” to ensure unregulated protocols cannot replicate the Eurodollar multiplier on blockchain networks.
Finally, BPI says the US should preserve foreign currency sovereignty by supporting local monetary systems alongside stablecoin adoption. The institute frames this as a way to ensure stablecoin integration acts as shared economic development rather than financial coercion.
In the institute’s view, these goals can be achieved without issuing additional sovereign debt to foreign governments or expanding the Federal Reserve’s balance sheet.
Featured image from OpenArt, chart from TradingView.com
