U.S. Strategy to Bolster Dollar’s Status
A recent report from Sygnum, a digital asset banking group, highlights the U.S. government’s strategy to bolster the dollar’s falling status as the world’s primary reserve currency through the promotion of dollar-pegged stablecoins. The Biden administration is taking active steps to encourage the expansion of the stablecoin market and is lobbying Congress to support relevant legislation aimed at this goal.
Legislative Efforts and Key Figures
The findings from the Sygnum report shed light on the U.S. dollar’s competitiveness and the measures being undertaken by Washington to maintain its influential position. Leading figures, including President Donald Trump, Treasury Secretary Scott Bessent, and David Sacks—who serves as the administration’s “Crypto and AI Czar” and leads the President’s Council of Advisors on Science and Technology—are advocating for the swift passage of the GENIUS Act, designed to regulate stablecoins and their issuers in the United States. This legislation has already cleared the Senate as of June 17 and is currently under consideration in the House of Representatives.
International Resistance and Alternative Stablecoins
Despite American efforts to enhance the appeal of dollar-pegged stablecoins, international resistance is mounting. The Italian Finance Minister recently expressed concerns that U.S. dollar stablecoins could pose greater risks than tariffs, emphasizing that these assets should not be dismissed lightly. Additionally, Dea Markova, the policy chief at Fireblocks, remarked to Cointelegraph that there is an increasing interest in stablecoins that are not linked to the U.S. dollar, even though they currently face liquidity challenges. Notably, Sygnum has collaborated with Fireblocks to develop a rapid settlement network facilitating stablecoin transactions.
Emerging Markets and Demand for U.S. Dollars
In Abu Dhabi, three major organizations are planning to introduce a dirham-pegged stablecoin, though this initiative awaits regulatory approval from UAE authorities. Meanwhile, Sygnum’s report also points out a substantial demand for U.S. dollars emerging from retail markets in developing nations, where inflation rates are rising and local currencies are losing value. The report indicates that the U.S. administration believes that dollar-denominated stablecoins could meet this demand while helping to restore the dollar’s status as a reserve currency.
Future of Dollar Dominance
Katalin Tischhauser, Sygnum’s head of research, stated that the prevalence of dollar stablecoins in the cryptocurrency market could reinforce the dollar’s dominance in monetary policy, particularly if the decentralized economy continues to grow. Nevertheless, she expressed skepticism regarding the ability of stablecoins to significantly boost dollar dominance without accelerated retail adoption in developing nations spurred by incentives.
Global Financial Landscape
On the global stage, members of BRICS, a coalition of ten countries, are pushing to diminish their reliance on the U.S. dollar, advancing a more multipolar financial framework that promotes the use of diverse fiat currencies for international trade and transactions, rather than depending solely on a single reserve currency.
