Reproducing U.S. Hegemony in the Digital Finance Era: Assessment of the Trump Administration’s Cryptocurrency Strategy by MA Bo and TU Yaling
Regulatory competition, efforts toward de-dollarization, constraints on the dollar’s credibility, and fragmented domestic regulation will pose challenges to the US crypto-asset strategy.
Welcome to the 72nd edition of our weekly newsletter! I’m SUN Chenghao, a fellow with the Center for International Security and Strategy (CISS) at Tsinghua University, Council Member of The Chinese Association of American Studies and a visiting scholar at the Paul Tsai China Center of Yale Law School (fall 2024).
ChinAffairsplus is a newsletter that shares articles by Chinese academics on topics such as China’s foreign policy, China-U.S. relations, China-Europe relations, and more. This newsletter was co-founded by my research assistant, ZHANG Xueyu, and me.
Through carefully selected Chinese academic articles, we aim to provide you with key insights into the issues that China’s academic and strategic communities are focused on. We will highlight why each article matters and the most important takeaways. Questions and feedback can be addressed to sch0625@gmail.com
Today, we have selected an article written by Cui Shoujun, which focuses on the Trump Administration’s Cryptocurrency Strategy.
Summary
Trump is attempting to make turning the United States into a sglobal cryptocurrency hub a national strategy. The author argues that the U.S. is not merely supporting an industry; rather, it is seeking to use cryptocurrencies and blockchain to extend the dollar’s influence from the traditional financial system into the “on-chain world.” The Trump administration’s approach broadly includes three elements: first, loosening regulation and changing key rules to promote the growth of the industry; second, advancing federal legislation to establish the legal status and regulatory framework for stablecoins; and third, creating national-level digital assets and Bitcoin strategic reserves—effectively “nationalizing” crypto assets such as Bitcoin—to attract capital, boost market confidence, and frame them as a tool to hedge against pressure on the dollar’s credibility.
The author argues that this approach can indeed deliver results in the short term: the U.S. crypto sector will become more prosperous, markets more active, and America’s global influence stronger. Over the long term, however, uncertainty remains. Externally, strict regulatory regimes in regions such as the European Union have become strong barriers to U.S. crypto development. Internally, the United States still faces confused remits among state and federal governments, as well as among different regulatory agencies. In addition, the trajectory of “de-dollarization” remains uncertain, and the volatility of crypto markets and potential systemic risks are difficult to resolve. Taken together, these factors could create significant resistance to the practical implementation of the U.S.’ crypto strategy.
Why It Matters
Competition among major global economies for leadership in digital currency and digital financial governance is accelerating. China, the European Union, and others are more inclined to strengthening financial sovereignty and institutional influence through central bank digital currencies (CBDCs). As of July 2025, 137 countries and jurisdictions have explored CBDCs; three have formally launched them, and 49 are in pilot programs. Meanwhile, some BRICS members and other emerging economies are using the U.S. dollar less in bilateral trade, accelerating the trend toward de-dollarization.
Against this backdrop, the Trump administration has chosen to use the market-driven, decentralized cryptocurrency industry as a lever—seeking to seize the high ground in technical standards, payment networks, and regulatory rules—and thereby reinforce the dollar’s dominance in the digital economy. Only by systematically mapping the administration’s strategic motivations and policy package, and understanding how the United States aims to reshape global financial governance in the era of digital finance, can we grasp the changing structure of global monetary power and the future direction of the development of digital finance in China.
Key Points
1. Overall Objectives and Operating Logic of the Trump Administration’s “Global Crypto Hub” Strategy
(1) Combining Institutions and Technology
The United States’ policy choices in the era of digital finance follow a path that fuses institutions with technology. Through federal legislation, innovative regulatory rules, and multilateral coordination, the U.S. provides sovereign-credit backing for privately developed technological outcomes such as dollar-pegged stablecoins and blockchain infrastructure, thereby lowering the political and financial risks for other countries adopting U.S.-style standards. At the same time, as these platforms expand into cross-border payments, asset tokenization, and decentralized finance, their technical standards are likely to gradually evolve into international norms—thereby reinforcing, in reverse, the U.S.’s rulemaking capacity and agenda-setting power. The mechanism through which the U.S. sustains financial hegemony is a closed loop: national interests, institutional arrangements, and technological embedding. National interests drive institutional design; institutional arrangements promote the embedding of technical standards into the international system; and technological advantages, in turn, strengthen institutional influence.
(2) Spillover of the Monetary System and Rules
On the one hand, the Trump administration leverages decentralized mainstream cryptocurrencies such as Bitcoin to enhance global liquidity and attract capital inflows. On the other hand, it uses dollar stablecoins as everyday instruments for payment and settlement, building—within a compliance framework—a privately led yet comprehensively regulated global payment network. After overseas users purchase stablecoins, issuers must hold an equivalent amount of U.S. dollars in cash or U.S. Treasury securities to ensure stablecoin liquidity, thereby extending demand for the dollar into the blockchain-based world. Internationally, the U.S. seeks to use multilateral mechanisms such as the G7 and G20 to promote the harmonization of digital-asset regulatory standards and technical specifications, ensuring that the emerging digital financial system continues to operate around the dollar. Through rule alignment and stablecoin clearing arrangements, Washington aims to export U.S. crypto-asset rules outward and secure U.S. leadership in digital-asset rulemaking.
2. Main Motivations Behind Trump’s Push for a Cryptocurrency Strategy
(1) Debt Pressures and Industrial Competitiveness
As of the first quarter of 2025, total U.S. federal debt had reached USD 36.21 trillion—about 120.87% of GDP—and international investors were also adjusting their allocations to U.S. dollar assets. By proposing a strategic reserve of digital assets such as Bitcoin and Ethereum, the Trump administration aims to send a positive policy signal, attract international capital, and explore unconventional ways to mitigate debt-related risks. At the same time, it uses financial liberalization as a lever to promote the integration of traditional finance and crypto assets, encourage the tokenization of real-world assets (RWA), and build decentralized capital markets, thereby strengthening the international competitiveness and market appeal of the U.S. financial sector.
(2) Alignment of Political and Commercial Interests
From a political-economy perspective, the Trump family has significant interests in the crypto industry. Trump reportedly holds a substantial amount of crypto assets privately and has been involved in promoting projects such as “World Liberty Financial” (WLFI). During the 2024 election cycle, the crypto industry and related firms invested more than USD 238 million in Trump’s campaign activities; accordingly, one purpose of the administration’s strong push for crypto assets in a second term is to reciprocate support from the sector.
(3) Preserving Dollar Hegemony
In terms of monetary power, while the U.S. dollar still ranks first in global foreign-exchange reserves—57.74% in the first quarter of 2025—its share has been trending downward. The Trump administration seeks, through legislation and digital-asset reserve policies, to bring major crypto assets onto a dollar-centric track and build a “Digital Fort Knox” in order to offset de-dollarization pressures.
3. Policy Measures: Legislative and Regulatory Reset, Stablecoin Compliance, and Strategic Reserves in Parallel
(1) Federal Regulation and Legislation: Establishing an Institutional Foundation
In its second term, the Trump administration has vigorously advanced several key legislative initiatives and regulatory adjustments. On July 18, 2025, President Trump signed the GENIUS Act into law, establishing a legal and regulatory framework for stablecoins. The Act emphasizes using stablecoins to modernize the U.S. dollar payment system, consolidate the dollar’s international position, and create additional demand for U.S. Treasury securities. At the same time, the administration has strongly promoted the FIT21 Act and the Lummis–Gillibrand (L-G) bill, seeking to reduce market uncertainty by clarifying regulatory jurisdictions and improving inter-agency coordination. On the regulatory front, in January 2025 the U.S. Securities and Exchange Commission (SEC) rescinded SAB 121, significantly lowering the institutional barriers for banks and financial institutions in entering crypto custody and related businesses.
Aligned with this legislative framework, stablecoin policy is positioned to “connect the credit base of U.S. fiat money with blockchain payment networks.” Through compliance-driven expansion and international promotion, Trump aims to turn U.S. dollar stablecoins into a de facto “digital dollar” public good—expanding dollar influence in cross-border payments and trade settlement, while also accelerating the digital expansion of traditional financial assets through asset tokenization.
(2) Establishing Strategic Reserves
On March 2, 2025, Trump announced that BTC, ETH, XRP, SOL, and ADA would be included in a new national strategic reserve of digital assets. He also proposed accumulating 200,000 bitcoins per year, reaching a total of 1 million bitcoins over five years. The government further audited and formally consolidated management over an existing stockpile of roughly 200,000 bitcoins, emphasizing that these holdings would not be liquidated or sold and positioning them as long-term strategic assets comparable to gold.
(3) Advancing Reform of Regulatory Institutions
Organizationally, Trump nominated Paul Atkins—widely known for his light-touch regulatory stance—as SEC chair and established a “Crypto 2.0 Task Force.” In addition, the administration created a White House–directed “Digital Asset Markets Working Group” within the National Economic Council, with White House AI and crypto advisor David Sacks tasked with driving cross-departmental legislative and regulatory coordination. Notably, the relevant executive order explicitly prohibits government agencies from establishing, issuing, or promoting a central bank digital currency (CBDC), while prioritizing support for the private-sector, U.S. dollar–stablecoin pathway instead.
4. Implementation Challenges: External Regulatory Competition, a Crisis of Confidence in the U.S. Dollar, and Domestic Regulatory Fragmentation
(1) The Weakening Effect of International Regulatory Competition on U.S. Rule-Export
U.S. regulatory loosening stands in sharp contrast to the EU’s MiCA framework, which sets stricter compliance requirements and higher entry thresholds for stablecoins and other crypto assets. South Korea, Japan, and Singapore have also developed their own prudential regulatory regimes. Divergent regulatory standards increase cross-border compliance costs for firms and intensify market fragmentation. This may push global digital finance toward a multipolar landscape dominated by regional standards, thereby narrowing the space for the United States to lead in rule-setting and to shape governance norms in the crypto domain.
(2) Regulatory fragmentation between the U.S. federal government and the states persists.
Long-standing disputes between the SEC and the Commodity Futures Trading Commission (CFTC) over the legal classification of crypto assets and jurisdictional authority remain unresolved, while regulatory standards also vary across states. As a result, the crypto market continues to face elevated uncertainty and compliance costs. Fragmented rules can further amplify regulatory arbitrage and systemic financial risks. If coordination problems cannot be effectively addressed, market stability in the crypto sector will remain difficult to secure.
(3) Constraints Posed by the Crisis of Confidence in the Dollar-Dominated System
With U.S. debt levels high and the U.S. government frequently deploying financial sanctions, the international system’s trust deficit toward the dollar continues to widen. More countries are seeking payment and settlement systems independent of the dollar. BRICS member countries and other emerging economies are vigorously advancing the mBridge local-currency settlement platform and the BRICSPay decentralized payment system, while China is also promoting the digital renminbi in cross-border payments and trade settlement. De-dollarization efforts are likely to deepen further, potentially weakening the United States’ attempt to achieve “re-dollarization” through stablecoins and Bitcoin reserves, and may even lead international markets to view Bitcoin more as a safe-haven asset independent of the dollar.
5. Outlook Assessment and Implications for China
(1) Paying Close Attention to the Spillover Effects of Compliant USD Stablecoins and the Expansion Path of the “Digital Dollar.”
Stablecoins create a closed loop of U.S. dollar liquidity through the linkage to reserve assets and the expansion of payment networks. China should continuously assess the implications for cross-border payments, capital flows, and financial sanction tools. In parallel, drawing on its own e-CNY and cross-border settlement practices, China should improve controllable digital payment infrastructures.
(2) Grasping the Trend toward Bloc Formation and Fragmentation in Global Digital-Finance Governance.
Global digital-finance regulation can broadly be grouped into three approaches: laissez-faire, stringent control, and sovereignty-and-security oriented. Competition over data sovereignty will further raise compliance and operating thresholds. China can strengthen tracking and research on digital-asset regulatory rules, data-governance standards, and cross-border compliance mechanisms under multilateral and bilateral frameworks, increase its level of participation, and safeguard its rule-shaping capacity.
(3) Striking a Balance between Innovation and Risk, and between Sovereignty and Openness.
The expansion of stablecoins, asset tokenization, and market volatility may generate systemic financial risks. The future direction of the global financial landscape will depend on whether countries can find new institutional balances in their policy design. China can, in light of its regulatory system and the needs of industrial development, advance the standardization of blockchain and digital-finance applications, strengthen risk assessment and bottom-line governance, and ensure domestic financial stability in the face of external shocks.
Conclusion
The Trump administration is actively advancing a cryptocurrency strategy by pursuing regulatory liberalization, expanding strategic reserves of crypto assets, and building a compliant framework for stablecoins. These measures represent a new attempt by the United States to sustain its monetary power in the era of digital finance. By providing sovereign backing to private-sector technology platforms and allowing this support to spill over into international norms, the administration seeks to extend the dollar’s advantages from traditional finance into blockchain-based and digital financial systems. In the short term, this approach may further stimulate the growth of the crypto industry and strengthen U.S. agenda-setting power in digital finance. However, international regulatory competition, efforts toward de-dollarization, constraints on the dollar’s credibility, and fragmented domestic regulation will also pose major challenges to America’s crypto-asset strategy.
About the Author
Ma Bo 马博: An Associate Professor in the Department of International Politics at the School of International Studies, Nanjing University, and holds a Ph.D. in Political Science. His research focuses on Chinese foreign policy theory, the intersection of international law and international relations, and Sino–U.S. foreign policy. He received a B.A. in Public Administration from Beijing Normal University, an M.Sc. in Comparative Politics from the London School of Economics and Political Science (LSE), an M.A. in International Relations from New York University (NYU), and a Ph.D. in Political Science from the City University of New York (CUNY). From 2014 to 2022, he conducted full-time research at Nanjing University’s South China Sea Institute, and has served in his current position since 2022. He also previously worked as an adjunct lecturer in the Department of Political Science at Queens College, CUNY.
Tu Yaling 涂亚玲: Master’s student at the School of International Studies, Nanjing University.
About the Publication
World Economics and Politics Forum（《世界经济与政治论坛》） is a scholarly bimonthly journal supervised by the Jiangsu Academy of Social Sciences and sponsored by the Institute of World Economics of the Jiangsu Academy of Social Sciences. Since its launch in 1981, the journal has continuously advanced and has become an important academic platform in China for research on world economics and politics. Since 2004, it has been consistently indexed as a source journal in the Chinese Social Sciences Citation Index (CSSCI) and included in the Guide to the Core Journals of China, among other major listings. At present, the journal primarily publishes the latest research in fields such as international relations, international politics, international security, international strategy, world economy, international trade and investment, and international finance, and it operates a double-blind peer-review system. The journal advocates academic freedom and equality, and is committed to fostering academic innovation, promoting scholarly exchange, and advancing academic prosperity.
