How America’s Stablecoin Gamble Could Backfire—And Hand China The Advantage

What Happened

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.

“As we speak, there are Malaysian companies, Indonesian companies, and companies here in Europe that increasingly use Tether… which is a huge problem. Suddenly, these countries… end up with central banks that do not control their money supply. So their capacity to effect monetary policy diminishes and that introduces instability,” Varoufakis added.

Market Context

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.

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.

Now, in a bid to reinforce its dollar dominance, the US is turning to stablecoins.

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.

“Just like in 2007-8, when the whole thing goes pear-shaped, there will be second and third generation effects that will have negative repercussions in the United States. So I think that this is going to be the next financial crisis coming out of the stablecoin market.”

China’s Controlled Capitalism Pays Off

Why It Matters

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.

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.

Details

Washington’s Stablecoin Power Play

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.

“If you want to send money from anywhere to anywhere, you have to go through the dollar system… That’s why [the US is] using sanctions as a weapon against anybody that they don’t like, for better or for worse,” Varoufakis told BeInCrypto, adding, “It’s the hegemony of the dollar that makes America not great, but strong. And they know that if they lose that, they’re finished.”

A New Strategy for Dollar Control

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.

“On one hand, [Miran] wants to reduce the exchange value of the dollar. On the other hand, he wants to keep the dollar as the main payment system in the world,” Varoufakis explained.

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.

“We know that the Federal Reserve is not an independent central bank. It’s independent of the American people and Congress, but it is totally dependent on JPMorgan and Goldman Sachs… Its role is to do a little bit of regulation, nothing that annoys Wall Street too much,” Varoufakis explained.

The deepened privatization of economic power, he argued, is a recipe for systemic fragility.

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.

In contrast, China has built a state-coordinated financial and technological ecosystem designed to prevent precisely such instability.