Washington is Repeating Its Semiconductor Mistake, This Time with Crypto

Earlier this year, White House officials gathered banking and crypto industry leaders, for a total of three meetings, to advance negotiations over crypto market structure, specifically, stablecoin rewards. These include interest-like payouts and incentives offered to consumers who hold or use stablecoins pegged to the dollar.

But just as U.S. policymakers meet to discuss the fate of payments innovation in the U.S., global crypto innovation is booming, marking another missed moment for the U.S. to lead in cryptocurrency governance. Across the world, other financial hubs are racing to establish their crypto strategy. In the EU, Markets in Crypto-Assets (MiCA) emerged as the regional market shaper, providing a unified approach for the issuance and governance of digital assets across all 27 member states.

Similarly, in the Asia-Pacific region (APAC), Singapore solidified its role as Asia’s crypto capital, offering both tax advantages and clear rules for token issuance and trading, attracting crypto investors and businesses alike. In Hong Kong, stablecoins took the lead with a comprehensive licensing regime for issuers, a move which directly appeals to global firms with expedited approvals and regulatory clarity.

The U.S., meanwhile, continues to debate whether crypto is ‘real’ enough to deserve coherent rules. That hesitation has moved beyond neutrality. It now suggests a strategic drift.

History shows what happens when America fails to treat foundational systems as strategic assets. In the 1960s, the U.S. led the world in semiconductor manufacturing, but by the 1990s, our share of global manufacturing had fallen from 40% to 12%.

Much of that innovation and manufacturing went abroad to Taiwan, South Korea, and China, where governments offered businesses and manufactures subsidies, tax breaks, and clear strategies to grow the industry. It took the CHIPS Act and hundreds of billions in investment just to begin catching up. Even now, we’re decades behind.

When you let critical infrastructure slip away, you lose the talent, capital, and innovation which grows around them. Crypto is now at that same inflection point. Regulation is the infrastructure layer. Delay is a strategic decision.

Right now, payment rails and stablecoins feel removed from everyday life. But they shape how fast you get paid and how easily you can send money to family abroad. If the next generation of fintech infrastructure is built elsewhere, Americans will lose this convenience and affordability.

We’re already seeing major exchanges and platforms move abroad, where settlements are being denominated in other currencies.

Over the past two years, some of the most high-growth U.S. based crypto companies have expanded to foreign markets; Singapore, the UAE, and Switzerland. Circle has opened an office in Paris; Gemini sought a license to operate in Dubai. These are jurisdictions where businesses can get clear answers from regulators in weeks, not years.

Dollar-denominated settlements are continuing to flow offshore. An Artemis study found stablecoin flows hit a record $33 trillion in 2025. Projections indicate total stablecoin payment flows could touch $56 trillion by 2030.

Much of that growth is happening outside the U.S., in markets where stablecoins function as practical dollars. For example, India saw $338 billion in crypto inflows last year. In Argentina, people are increasingly using stablecoins to hedge inflation resulting in a shift where dollar-denominated settlement actually occurs. It’s clear whoever designs the payment rails decides how value moves across them.

Take Japan. Its first stablecoin, the JPYC, pegged to the yen, launched last fall, powers free, low-cost transfers and business payments. At the same time, other jurisdictions are actively integrating tokenization into regulated banking.

They could channel large volumes through non-dollar stablecoins, reducing global demand for dollar liquidity, chipping away at the dollar’s role as the default unit of account.

Consequently, Americans could end up paying more for everyday financial services. For example, remittances and freelance work across borders could become slower, expensive, and routed through foreign platforms that do not prioritize consumer protections.

Dollar dominance is not just a prestige issue. It is one of the reasons Americans benefit from lower borrowing costs and imports, and a strong consumer economy. If more commerce moves through non-dollar rails, demand for dollars weakens, which can translate to higher inflation and interest rates.

A dominant crypto sector in the U.S. could expand the network effects of the U.S. dollar into new markets. Losing this advantage creates room for competing currencies to gain global traction, impacting the purchasing power of American households in the long run.

The irony is that the U.S. is not starting from scratch. Last year, lawmakers passed the GENIUS Act, which established a federal framework for payment stablecoins. Banks, fintechs, and global firms now have the regulatory clarity they need to build retail payments and cross border commerce.

GENIUS marked a meaningful step, but infrastructure is not built in fragments. Just a day earlier, the House passed a bipartisan market structure bill, the CLARITY Act which focuses on market structure reform. Under the act, fraudulent violations would be treated under a securities or commodities regime. The act would help gather consensus for digital asset oversight across the SEC, CFTC, Treasury, and state regulators which is key to a sustainable crypto ecosystem.

With the Senate’s delay on the markup for the CLARITY Act, the U.S. risks recreating the very uncertainty that has already pushed tech innovation offshore in the semiconductor industry.

Inconsistent enforcement and unresolved definitions are barriers to domestic scale. This is where the semiconductor analogy matters most. When the U.S. lost its manufacturing base, it lost its strategic leverage. It became dependent on foreign supply chains for technologies that power everything from phones to fighter jets.

If the U.S. allows those rails to be designed offshore, it will operate on standards it did not write. China is already pushing forward their own digital currency experiments. Last year, they pushed a digital yuan, and are now exploring yuan-backed stablecoins to expand their global reach.

The systems that move money also shape trade and geopolitical influence. With semiconductors, we let a foundational system drift offshore. With crypto, we still have a choice.