Imagine a world in which a Texas rancher in Fort Worth or a small-business owner in San Antonio is operating in a financial system increasingly monitored by Beijing. Illicit payments move in seconds on networks no American regulator can see, in currencies that are not the U.S. dollar, and America’s sanctions and financial regulators cannot touch them. That is not a hypothetical; it is a construction project already underway.
Look at what Beijing built while Washington deliberated. China’s digital yuan is deployed across more than 200 cities. mBridge, a platform for cross-border payments that bypasses dollar correspondent rails, has moved from pilot to live operation with the backing of China. This is not a technology demonstration. It is an exit ramp from the American financial perimeter, and our adversaries are paving it.
The stakes are badly misunderstood. For decades, the dollar has given the United States the ability to see illicit money movements and to stop it. That leverage does not come from the currency alone. It comes from the infrastructure the currency runs on, nearly all of it subject to American law. Sanctions work because payments pass through systems we supervise. When they stop passing through those systems, our leverage weakens. The country that writes the rules for the next generation of payments will hold the leverage in the generation after that.
Texans know the value of clear and predictable financial rules. Those rules have made Texas home to more state-chartered banks than almost any other state in the country, while also fostering successful energy and agricultural industries. When it comes to digital assets, clear rules will determine where economic opportunity goes and who gets financial leverage.
That leverage is not theoretical. In April 2026, within days of an updated Treasury designation, roughly $344 million in stablecoins tied to the Central Bank of Iran’s reserve infrastructure was frozen. Comparable action against cash in a sanctioned central bank’s vault, or against laundered funds crossing four correspondent banks, would have taken years if it were possible at all. It worked because the issuer was an American firm answerable to Treasury’s Office of Foreign Asset Control (OFAC). If the United States does not stay at the forefront of digital technology, including updating our regulatory environment, digital currency issuance will move offshore and the freeze capability goes with it. As a state with several ports, a shared border with Mexico, and a global energy trade, Texas relies on strong law enforcement capabilities to protect against hostile actors.
The stakes are clear in Texas’ fight against cartels. In fiscal 2025, hard drug seizures jumped 62 percent over the prior year and in the Laredo field office alone, Customs and Border Control seized over 71,000 pounds of narcotics, 196 of which were fentanyl. Increasingly, the cartels have moved their money through digital asset channels. In one case, federal prosecutors charged 24 people connected to the Sinaloa cartel with laundering over $50 million, using digital assets as a tool.
The CLARITY Act prevents money laundering by requiring crypto exchanges and brokers to institute anti-money-laundering programs and report suspicious transactions much like banks do. The National Organization of Black Law Enforcement Executives, whose national president Reneé Hall was once the chief of police at the Dallas Police Department, endorsed the bill because it strengthens law enforcement capabilities. Sen. John Cornyn (R., Texas), who previously served as a Texas attorney general and combatted illicit finance, knows a useful statute when he sees one.
America is winning this race right now. More than 99 percent of stablecoin value is denominated in dollars, and development is moving back onshore. The size of the dollar stablecoin market rivals the roughly $250 billion economy in Austin. That scale presents a real opportunity for Texas’ investors and financial institutions if the next generation of financial technology is built onshore. With Austin emerging as a hub for digital assets and blockchain technology, clear rules can also create jobs and attract investment for the state. President Trump’s approach has been the right one: passing the GENIUS Act for regulation of stablecoins, clear written guidance from banking regulators, and an end to policy by after-the-fact enforcement.
But that lead is not secure. It still rests too heavily on agency interpretation and executive discretion, not on durable law. A change in administration, a new regulator, or one aggressive enforcement action could reset the board overnight. America’s share of global blockchain developers fell from 38 percent in 2015 to 19 percent in 2024 when overzealous regulators like Gary Gensler relied on litigation instead of Congressionally enacted laws. Founders, engineers, and capital moved to Singapore, Dubai, and Zurich. Opportunity that should be built here in the United States was built elsewhere instead.
America did not win the internet by owning the protocol. Congress legislated open systems that rewarded the companies that executed best. The result was free market competition resulting in the US dominating the internet era. We must do the same in the transition to digital payments. With the deepest capital markets, the best entrepreneurs, and the strongest rule-of-law tradition in the world, America should be writing the rules of digital finance, not reacting to rules written elsewhere.
That is why Congress should pass the CLARITY Act to set rules of the road for non-stablecoin digital assets. It would resolve the fight between the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) that has left compliance teams guessing what rules it needs to follow. It would subject digital commodity exchanges, brokers, and dealers to the Bank Secrecy Act, which combats illicit finance. It would extend Treasury’s Section 311 special measures authority to digital assets, making it harder for North Korea and other hostile actors to route payments around American enforcement. And it would send U.S. negotiators into global standard-setting fights with a statute behind them instead of a lawsuit.
Some in Washington still view cryptocurrency as a tool for illicit finance. With a modernized legal structure, digital assets are instead an effective law enforcement instrument. Digital asset transactions are recorded on a public ledger, which investigators can access to track illicit funds. In one case, law enforcement won a $15 million forfeiture from a major fentanyl vendor using blockchain records. The CLARITY Act strengthens law enforcement capabilities by opening a formal channel for the FBI, DEA, and Treasury to collaborate with blockchain analysts, and it allows a platform to freeze a suspicious transfer for 30 days, extendable to 180 with a written request by law enforcement. The Federal Law Enforcement Association, which represents more than 34,000 federal officers, endorsed the bill in July. Senator Cornyn must help get it to the President’s desk.
The surest way to lose the U.S. financial system’s global dominance is to do nothing and call it prudence. Nothing would please Beijing more.
Michael Faulkender is the William Longbrake Professor of Finance at the University of Maryland. He served as deputy U.S. Treasury secretary in 2025.
