The Trump administration is considering joint ventures with private companies to promote dollar-backed stablecoins overseas, aiming to reinforce the dollar's global dominance and boost demand for U.S. Treasury securities. The Treasury and State Departments, alongside the U.S. International Development Finance Corporation, could lead the push. The International Monetary Fund has warned the move could accelerate capital flight from emerging economies.
Washington is looking to leverage stablecoins to cement the U.S. dollar's stature as the premier global reserve currency. The Trump administration is considering a plan involving joint ventures with private players to promote the use of dollar-backed stablecoins overseas, according to Bloomberg. The aim is to boost the dollar's dominance and source demand for U.S. Treasury notes.
Treasury and State could lead the push
The Treasury and State Departments could play key roles in promoting U.S. dollar stablecoins globally, alongside the U.S. International Development Finance Corporation. Stablecoins are blockchain-based tokens pegged to an external reference such as the dollar, and they are widely used to fund crypto trading and cross-border payments.
USDT and USDC, the two largest stablecoins, together account for almost 90% of the total stablecoin market value of $292.49 billion. Under the U.S. Genius Act, issuers must hold reserves including dollars and short-term Treasuries. Treasury Secretary Scott Bessent has described dollar-backed stablecoins as a tool supporting the dollar's dominance, noting the dollar accounts for nearly 90% of foreign exchange transactions.
With aggregate holdings approaching $200 billion, stablecoin issuers are already among the top 20 holders of U.S. sovereign debt, ahead of the reserves held by several major nations.
Risks for emerging markets
The plan could also create risks for emerging economies with current-account deficits that are vulnerable to capital outflows. Stablecoins move over blockchains and bypass traditional banking channels, which makes it harder for central banks to monitor and influence those flows. If dollar-backed stablecoins achieve widespread adoption in everyday transactions, domestic fiat currencies in those markets could come under intense pressure.
Source: CoinDesk
Trading involves risk.
Risk Disclaimer
