The Interesting Case for the US to Greenlight Dollar Pegged Stablecoins \ stacker news ~econ

The Interesting Case for the US to Greenlight Dollar Pegged Stablecoins

415 sats \ 18 comments \ @Cje95 30 Jul econ

A week and a half ago I was attending the second of a three-part series covering BTC. These sessions were quite interesting because they would bring together people, from CleanSpark, Riot Platforms, Marathon Digital, and others. It was during this second session that I first heard of an idea that has made a lot of sense to me.

The US should encourage USD-pegged stablecoins.

Over the last couple of years, it has become much more common to hear people talk about the US debt issue and the US running out of parties who were interested in its debt. This then has fed into the idea that the US dollar could lose its World Reserve status and while I do not see that becoming an issue or something that would happen in my lifetime (the US dollar is backed by the most sophisticated and impressive military in the world... that what you do get with an enormous military budget like the US has) others are not so sure.

So why would the US want to encourage USD-backed stablecoin adoption and development? The US would stand to benefit immensely since stablecoin issuers now hold over $120 billion in US Treasury Notes making them the 18th largest holder and this number hasn't slowed down. Not only that but as Sam Lyman of Riot Platforms told us it would be a huge tool in ensuring further dollarization across the world helping further cement the USD as the World's Reserve Currency. The size of USDT and USDC Treasury holdings are larger than that of Germany and South Korea.

If Congress or Regulators clear the way for stablecoins preventing the SEC and CFTC from going after them then they could really take off and grow. Assuming they keep the basic rule that they have to have a dollar for every dollar they issue then the Treasury Notes will continue to be a fantastic source for them. Thus increasing the demand that these issues will have and creating a thriving market for US debt. The result is a win/win for everyone involved with the US government possibly securing hyperdollarization something which would immensely benefit the US and the USD.

This is why I love going to these briefings that are held on The Hill because I never would have put all of these factors together. I could have seen the great appetite that would have been had for debt but I never would have thought about how this debt could further the dollar, even in a digital way, solidifying if not expanding the US's grasp on the world economy.

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10 sats \ 6 replies \ @Undisciplined 30 Jul

It seems like the primary threat to the dollar is the US Government's sanction regime. That's what ensures global demand for non-dollar money. How do stable coins address that?

If they don't address it, then I don't see how they help drive dollarization.

42 sats \ 4 replies \ @Cje95 OP 30 Jul

There are a lot of issues that counties face when not dealing with the dollar and we have seen this occur. After people freaked out about the Saudi news the Saudi oil company issued its bonds in USD. With India, Russia, and China settling in any of these currencies is an issue due to volatility. India has been burned several times already and has pushed back against these settlements.

With China pulling back on the Silk and Road the only big bailout entities now are the World Bank and IMF. Silk and Road was the none USD equivalent but China cannot afford it anymore. For stability of your country USD is the defacto default and nothing has challenged that. The idea of a BRICS currency has one critical issue and that is none of these countries want to give up control. China and Russia are both either at the population cliff level or about to be so there economies are in for a brought time. India has the inside trade to take control but China would never want that to happen.

0 sats \ 3 replies \ @Undisciplined 30 Jul

I'm also very skeptical of a BRICS currency. The persistent demand I see for non-dollar currencies comes from countries who are cut off by US sanctions. Russia, Cuba, and Venezuela all still have economic ties to the rest of the world and something other than dollars has to facilitate that.

31 sats \ 2 replies \ @Cje95 OP 31 Jul

All of those countries though have incredible internal issues they are having to deal with on a consistent basis which makes it even harder for a partner to take the government at the time at its word. Putin while he still seems strong is dealing with a war that he has to continue not because he even wants to but because if those soldiers come back home and have to deal with the economic conditions they will rise up. \

Cuba is essentially an island that is closer to the US than anyone. Without the USSR they had to work to forge better ties with the US and those have led to huge demonstrations. With Venezuela, we say the Petro fail and now they cut ties with what 6 or 7 Latin American countries surrounding them yesterday? They wont be able to North Korea themselves because they cannot provide food or power for themselves.

0 sats \ 0 replies \ @Undisciplined 31 Jul

I get that they're all a mess, but that doesn't have anything to do with my point. They can't dollarize, unless the sanctions are dropped.

0 sats \ 0 replies \ @IDhumanoid 31 Jul

Off topic, but thank you for highlighting the existence of this wonderful resource on another platform. Perhaps without you it would not have been possible to get here.

21 sats \ 0 replies \ @DEADBEEF 31 Jul

Agreed. People are fleeing the dollar due to money printing and the weaponization of the USD.

1 sat \ 0 replies \ @joda 31 Jul

So the people who desperately need something to protect them against their own nation's hyperinflation would be the ones holding the bag?

The stablecoin issuers collect the interest while the people of Turkey (say) have a nominal amount of dollars which lose value slower than the Lira.

I'd rather have a crypto that owns S&P stocks, I think.

1 sat \ 1 reply \ @SatsMate 31 Jul

I'm not a fan of pegged stablecoins... As we saw with Tether over the past couple of years they froze several OFAC-sanctioned addresses because the government wanted them to.

Let's call a stablecoin what it is at best: A Fiat Currency, and at worst, a CBDC.

0 sats \ 0 replies \ @Cje95 OP 31 Jul

I mean to be fair a lot of the frozen addresses were either contained stolen funds or linked to terror/crime groups so I am not to bothered about it because Tether makes the final call not the government. The government can already freeze my stuff and track my crypto so we kinda sol on that front

0 sats \ 2 replies \ @037447d9ca 31 Jul

Tether does not pose any threat to the dollar. Decentralized stablecoins backed by hard bitcoin are the real threat.

0 sats \ 1 reply \ @Cje95 OP 31 Jul

This post doesnt say that at all so I mean read it again?

0 sats \ 0 replies \ @037447d9ca 1 Aug

The post states the obvious: that tether is functional to the status quo. I'm stating that the real revolution can happen with bitcoin-backed stablecoins rather than IOUs backed by treasury bonds.

0 sats \ 3 replies \ @Satosora 31 Jul

Arent stable coins supposed to be stable. They wouldnt really grow, they would just be created, limitlessly. Isnt this even worse for our economic outlook?

20 sats \ 2 replies \ @Cje95 OP 31 Jul

To answer your questions...

Yes they are supposed to be stable and comparing the USD to the rest of the currencies out there the dollar is the most stable even without wild politics at the moment!

The usage and the number of them would grow furthering the dollar as a whole! You are correct in that they are not supposed to really "grow" in value except for if you are in a place suffering from hyperinflation then I think you could argue that your dollar did grow just because its purchasing power has grown.

Most of what is used in currency in the world right now does have the issue of limitless creation. Even if we went to a gold-backed I don't think that would stop it. Countries would want/need to get more and more and looking at the space area I wouldn't be surprised to see government pour money into space mining and since we have found various planets/astroids/etc that are full of minerals including gold these countries would just go to those locations to find them.

Space mining might be far off as of now but if you manhattan project the idea then it suddenly become a lot easier to accomplish

0 sats \ 1 reply \ @Satosora 31 Jul

Manhattan project the idea? The space mining might happen, but I would think they would try to wring the earth out of every single mineral, first. Then the moon. Does the moon have any minerals or metals?

0 sats \ 0 replies \ @Cje95 OP 31 Jul

Prior to the Manhattan Project a nuke was thought to be decades off. The US mobile tens of thousands of people (most who had no idea what they were helping with) to take something that was decades away and rapidly speed it up.

In the avenue that we have been talking the moon isn't a good source of gold, silver, etc. It does have one particular thing that is extremely difficult to get in the US and that is Helium 3. Helium 3 is what fusion reactors will likely need and it is also big in quantum computers due to its crazy good cryogenics properties

0 sats \ 0 replies \ @037aef6755 30 Jul

Well spotted.