By passing the GENIUS Act, the United States has signaled its commitment to building a stablecoin-based economy. Through this initiative, it aims to reinforce the global dominance of the dollar. However, Yanis Varoufakis views it as a recipe for disaster.
In an exclusive interview with BeInCrypto, the Greek economist and former finance minister warned that the legislation could trigger a financial crisis even more severe than in 2008. Against this backdrop, he argues that China’s more state-controlled and disciplined approach to economic power is better positioned to prevail.
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Washington’s Stablecoin Power Play
Since the end of the Bretton Woods era, the United States has maintained its global dominance largely through financial power and dollar supremacy.
However, this dominance, once supported by a solid industrial base, has evolved as America’s manufacturing capacity has declined. Today, Washington’s influence rests instead on two pillars: Silicon Valley’s command of Big Tech and the dollar’s control over international payments.
This ability to route most global transactions through the US financial system gives Washington immense leverage. It allows the country to impose sanctions, finance deficits at low cost, and maintain its geopolitical influence.
Now, in a bid to reinforce its dollar dominance, the US is turning to stablecoins.
A New Strategy for Dollar Control
In November 2024, American economist Stephen Miran—a close ally of Trump and now a member of the Federal Reserve Board—introduced an economic framework known as the Mar-a-Lago Accord.
At its core, the plan entailed a controlled devaluation of the dollar to reduce trade deficits and revive US manufacturing, while maintaining the currency’s role as the world’s reserve standard.
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The GENIUS Act aligns closely with this vision. By supporting a regulated stablecoin economy, it effectively extends dollar dominance, reinforcing America’s monetary power through crypto-based infrastructure rather than traditional banking.
However, according to Varoufakis, this approach is dangerously short-sighted.
When Stablecoins Become Systemic Danger
By allowing banks and private issuers to build and pilot the stablecoin economy, Varoufakis warned that it reinforces the very dynamic that has long defined the American system– a government dictated by Wall Street.
The deepened privatization of economic power, he argued, is a recipe for systemic fragility.
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If a major stablecoin were to collapse—through mismanagement, speculation, or a crisis of confidence—the effects would ripple across borders. Foreign economies using dollar-backed tokens would have no recourse, since they cannot print dollars to stem the panic.
Such a failure could unleash a chain reaction reminiscent of the Great Recession. Varoufakis warned that this would amount to a self-inflicted global crisis—driven by America’s effort to digitize and outsource its financial empire to the very institutions that once pushed it to the brink of collapse.
In contrast, China has built a state-coordinated financial and technological ecosystem designed to prevent precisely such instability.
China’s Controlled Capitalism Pays Off
While the US government answers to Wall Street, Chinese bankers and tech leaders respond to the state, according to Varoufakis. Private firms are allowed to profit, but they operate within strict limits set by the government.
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Varoufakis described China’s integration of Big Tech and finance as notable. Platforms such as WeChat Pay and the digital yuan have established a unified and efficient payment network operating under state supervision.
By contrast, the US cannot easily replicate this model, as Wall Street stands firmly in the way. Integrating digital payments with credit and banking would undermine its control over the financial system.
He doubled down on this distinction by arguing that the US has advanced technology but no clear direction, leaving private monopolies to dominate. As a result, it remains technologically strong but politically stalled, unable to modernize or build effectively.
In his view, this difference will define the coming struggle for global economic power—and ultimately determine which system survives.
Source: https://beincrypto.com/how-americas-stablecoin-gamble-could-backfire-and-hand-china-the-advantage/
