From the East India Company to Sovereign Individuals: How Dollar Stablecoins Are Reshaping the Global Financial Landscape

1. The Charter of the Digital Age: The Rise of the New East India Company

Looking back at history, the East India Company of the 17th and 18th centuries became a multinational trade giant with state authorization. Today, the "Genius Act" has issued new charters for the "Digital East India Company" of the 21st century. These recognized stablecoin issuers, such as Circle, will dominate the global financial landscape of the new era.

From maritime trade to digital finance, the essence of power remains similar. Stablecoin issuers will determine who can access the system and set the trading rules, which is a deeper, more intangible form of control. However, just as the East India Company in history eventually came into conflict with its mother country, the evolving relationship between future stablecoin giants and the U.S. government is also worth noting.

II. The Reshaping of the Global Currency Landscape: The Dollarization Wave and the Challenges from Non-U.S. Central Banks

The "Genius Act" will trigger an unprecedented wave of global dollarization. For many credit-weak countries, the public may quickly abandon their local currencies in favor of the readily available digital dollar. This will lead to a series of serious consequences:

1. The local currency exchange rate is spiraling down, triggering hyperinflation.
2. Economic activities priced in US dollars have experienced severe deflation.
3. The government's tax base is rapidly evaporating, and the finances are collapsing.

This currency revolution not only impacts America's rivals but may even trigger power struggles within the United States. The White House may indirectly intervene in monetary policy by influencing stablecoin regulatory rules, challenging the independence of the Federal Reserve.

3. The Financial Battlefield of the 21st Century: The Contest Between Openness and Closure

The "Genius Act" marks a key strategy deployed by the United States in its game with China: to build a private, public blockchain-based "free financial system" centered around the dollar. This is the new version of the "Bretton Woods system" in the digital age.

The strategy of the United States is to attract global innovators and users through openness. In contrast, China's digital yuan adopts a closed "licensing" system, making it difficult to gain global trust. The United States is building its advantage with the "loss of control" that its opponents fear the most.

This strategy also effectively bypasses the SWIFT system, making the efforts of other countries to establish alternative cross-border payment systems obsolete. In this new battlefield, the rules are defined by code and protocols, rather than intergovernmental treaties.

4. The "Denationalization" of Assets: The Disruptive Impact of RWA and DeFi

Stablecoins are just the beginning of the revolution. The real transformation lies in converting various assets into digital tokens that can flow freely around the world. This process, known as "real-world assets on-chain" (RWA), will fundamentally sever the connection between assets and the jurisdiction of specific countries.

The combination of RWA and DeFi is creating a financial parallel universe that almost ignores traditional political and legal boundaries. This is not only an upgrade to the payment system but also a reconstruction of the entire financial system. The intermediary role of traditional financial institutions will be replaced by smart contracts, and banks, exchanges, payment companies, and others will face disruptive challenges.

V. The Rise of Sovereign Individuals and the Transformation of State Forms

With the increase in capital liquidity and the de-nationalization of assets, we are witnessing the prophecy in the book "Sovereign Individual" come true. The most creative individuals will be able to easily allocate wealth globally, freeing themselves from the constraints of a single nation. This means that the Westphalian system is coming to an end.

The country will face unprecedented challenges:

1. Tax revenue capacity is weakened, and the fiscal foundation is shaken.
2. Taking more aggressive measures to retain elites may instead accelerate the loss of talent.
3. It may transform into a "nanny state" that only provides welfare for disadvantaged groups.

In the future, advancements in privacy technology may become the final piece of this revolution, completely challenging the tax capacity of nations. We are standing at a critical point where the old order is disintegrating and a new world is emerging, individuals will gain unprecedented freedom but will also face unprecedented uncertainty.