The Arrival of the New Era of Digital Money: The Transformation of Stablecoins and the Global Financial Landscape

Recently, an important bill was passed in the United States, which will open new avenues for the development of stablecoins. This bill is not just a technical adjustment to financial regulation, but it also grants a charter to the "New East India Company" of the 21st century, marking the beginning of a transformation that will reshape the global power landscape.

The Reenactment of History: The East India Company in the Digital Age

Looking back at history, the Dutch and British East India Companies of the 17th and 18th centuries were granted national authorization and special powers. Today, through this bill, the United States is granting legitimacy to the power giants of the new era – stablecoin issuers. These recognized companies, such as USDC issuer Circle, and potential future tech giants, will become "chartered companies" formally incorporated into the financial strategy landscape of the United States. They will control the global trade routes of the new era – a 24/7 uninterrupted, borderless digital financial track.

These emerging "Digital East India Companies" will exercise power by controlling the financial tracks of global value flows. They can decide who has access to this system, freeze assets based on directives, and set compliance standards for transactions. This is a deeper and more intangible form of power than controlling physical trade routes.

The Dramatic Shift in the Global Currency Landscape

The impact of this legislation extends far beyond the United States; it will trigger a monetary tsunami that sweeps across the globe. For countries with already fragile sovereign credit, the future will no longer be about whether the government chooses its own currency or the traditional dollar, but rather about the public choosing between a collapsing local currency and the accessible digital dollar. This could lead to an unprecedented wave of super dollarization, completely ending the monetary sovereignty of many nations.

When a country's inflation expectations rise slightly, capital will no longer be "flowing out" but rather "evaporating"—instantaneously disappearing from the local currency system and entering the global cryptocurrency network. This phenomenon can be defined as "an increase in the substitutability of sovereign currency."

For a government whose credit is already on the brink, this will be a fatal blow. They will lose the power to compensate for fiscal deficits through money printing, as well as the ability to regulate the economy through interest rates and money supply. What may follow is severe deflation, evaporation of the tax base, and a collapse of national governance capabilities.

Digital Finance Battlefield: America's New Strategy Against China

This bill is not just a domestic policy; it is also an important pawn in the United States' great power competition with China. The U.S. is legislating to support a private, public blockchain-based "free financial system" centered around the dollar.

The strategic paths of China and the United States in Digital Money show fundamental differences. China's digital renminbi is a typical "permissioned" system that operates on a private ledger controlled by the central bank. In contrast, the stablecoins supported by the United States are built on a "permissionless" public blockchain, where anyone can innovate on this network without the need for approval from centralized institutions.

This is a clever asymmetric strategy. The United States is leveraging its opponent's weakest link — the fear of losing control — to build its own moat, attracting global innovators and users seeking financial freedom to join the dollar-centered open ecosystem.

The "Non-Nationalization" of Assets and the Challenges to the Traditional Financial System

The proliferation of stablecoins will pave the way for deeper revolutions. Through "real world assets on the chain" (RWA), various valuable assets could be transformed into digital tokens that flow freely on global public ledgers. This will fundamentally sever the connection between assets and specific national jurisdictions, achieving the "denationalization" of assets.

This new financial ecosystem driven by stablecoins and based on RWA will pose a comprehensive impact on the traditional financial system. Many functions of traditional financial institutions may be replaced by decentralized protocols and algorithms, such as the deposit and lending business of banks, matching transactions of exchanges, and cross-border settlement of payment companies.

The Rise of Sovereign Individuals and the Transformation of State Forms

With the borderless flow of capital and assets detached from judicial jurisdiction, we may be witnessing the arrival of a new era led by "sovereign individuals." This revolution, driven by stablecoins and artificial intelligence, could have impacts that surpass those of the French Revolution, as it transforms not only regimes but also the very form of power itself.

When the most creative and productive individuals conduct their economic activities and accumulate wealth "offshore", the boundaries of territory lose their significance. Countries may find themselves unable to effectively tax these globally mobile elites, and their financial base will inevitably be weakened.

The next step of this revolution may be a breakthrough in privacy technology. When a global, stablecoin-based financial system combines with powerful privacy technology, it will pose a final challenge to the tax capacity of nations.

We are standing at the dawn of the disintegration of an old world and the emergence of a new order. This new world will grant individuals unprecedented freedom and power, but it will also bring challenges that we can hardly imagine today. Finding a balance between personal freedom and social order will be a major issue that our generation needs to face.