ON June 17, the United States Senate passed the Genius Act – short for Guiding
and Establishing National Innovation for US Stablecoins – with a decisive 68 to 30 bipartisan vote.
Once passed by the House of Representatives and signed into law by President Donald Trump, this legislation will establish a federal framework to regulate USD-pegged stablecoins like USDC.
This is a landmark moment, not just for the US but for the entire world. Countries like Malaysia, which operate on principles of neutrality and non-alignment, should pay close attention.
Stablecoin era has begun
Stablecoins are digital tokens backed one-to-one by fiat currencies such as the US dollar. They offer the speed and global accessibility of blockchain technology while retaining the price stability of traditional money.
Among these, USDC, issued by US-based Circle, already has a market capitalisation of over US$61 billion (RM258 billion). With the Genius Act in place, stablecoins like USDC are likely to become the default global rails for digital money. They are already being used by individuals, businesses and institutions across the world.
The appeal is clear – they offer instant settlement, low-cost transfers and access to digital dollars for the unbanked or underbanked. However, as adoption accelerates, the question is no longer just about innovation; it is increasingly about control.
One country, one kill switch
A stablecoin may move across a decentralised blockchain but its freedom is ultimately limited by the jurisdiction of its issuer.
USDC is fully dependent on US legal and financial infrastructure. If a user, company or country violates US foreign policy, banking rules or political expectations, their digital dollars can be frozen or invalidated without notice.
Even if a user holds USDC in their own wallet, known as self-custody, the actual fiat backing the token sits in US-based bank accounts governed by US regulators. This is not a theoretical risk. The US has long used financial infrastructure to enforce foreign policy. In the era of programmable money, this power becomes faster, more targeted and increasingly difficult to contest for those outside the US legal system.
How stablecoins shift global power
The US Federal Reserve’s M1 money supply, which includes physical cash and domestic demand deposits, stands at around US$19 trillion. When you include offshore USD demand deposits and foreign-held cash, global estimates rise to around US$38 trillion.
Under the current system, much of this offshore money remains outside direct US control. Local banks manage USD accounts. Physical cash moves freely. Central banks in non-aligned countries, like Malaysia, hold reserves with limited US interference.
Stablecoins change this dynamics. If they come to represent even 50% of global USD liquidity, we can see USD 19 trillion worth of digital dollars issued by US-regulated entities. These digital dollars would be programmable, traceable and revocable at the source.
What was once a relatively decentralised network of dollar access points could become a centralised infrastructure controlled by a few US-domiciled issuers, under the jurisdiction of one government.
This would represent an unprecedented concentration of global liquidity. In a time of shifting geopolitical alliances, this is not a future the world should accept without question.
Malaysia and the Global South must lead
The issue is not with stablecoins themselves – they represent a major financial innovation with real benefits. The problem lies in how they are governed and who ultimately controls them.
Malaysia, Asean and other emerging economies should not wait to respond. They must take the lead in shaping a digital future that reflects their own sovereignty, strategic interests and values.
This means initiating efforts to develop global-use stablecoins that are legally domiciled across multiple, neutral jurisdictions. These stablecoins should be backed by diversified reserve assets, not limited to US banks or financial systems.
They should also be governed by inclusive, multistakeholder frameworks rather than controlled unilaterally by any single state or corporation.
This cannot be left to startups or the private sector alone. It requires commitment at the state level, collaboration with regional development institutions and regulatory foresight.
A window that will not stay open
The Genius Act signals that the US is serious about regulating and leading in digital financial infrastructure. But it also signals the closing of a chapter in which financial sovereignty was preserved through distributed systems and cross-border independence.
As stablecoins become embedded in trade, savings and banking services, the risks are no longer just technical. They are political and strategic. They reach into the core of how countries manage access to money and capital.
The moment to act is now. If countries like Malaysia do not help shape this new reality, they may wake up to find their financial systems increasingly governed by infrastructure they do not own and cannot influence.
That is not just a question of technology. It is a question of national sovereignty.
Syakir Hashim is the founder of Zayn Labs, a venture-backed fintech company building ethical, Shariah-compliant digital financial infrastructure. He is a vocal advocate for financial inclusion and the responsible use of emerging technologies. Prior to founding Zayn Labs, he served as CEO (Malaysia/APAC) and later group senior vice president at Wahed Inc, a New York-based global Islamic Digital Investment Management company. Comments: [email protected]
