United States President Donald Trump’s administration plans to regulate stablecoins and bring the companies behind them onshore.
Trump’s crypto czar, David Sacks, recently told CNBC that stablecoins are among the key focus areas of the Trump administration. He explained that this market “has already taken off but mostly offshore,” and the current government wants to “bring that innovation onshore.” He added:
“I think the power of stablecoins is that it could extend the dollar’s dominance internationally and extend it online digitally.”
The details
CoinGecko data shows that stablecoins are worth $227 billion, and 97% of those tokens track the value of the United States dollar. Tether’s USDT alone is responsible for 60% of that market value.
Sacks believes that stablecoins could lead to “potentially trillions of dollars” of new demand for United States treasury assets. This, in turn, could help support United States debt and decrease long-term interest rates.
The government official further highlighted that stablecoins could enhance the relevance of the United States dollar in global finance. The comments follow a late January announcement by the white house that the administration plans to promote the United States dollar’s sovereignty.
Measures employed to achieve this end would include “actions to promote the development and growth of lawful and legitimate dollar-backed stablecoins worldwide.” The announcement also reads:
“The Working Group shall propose a Federal regulatory framework governing the issuance and operation of digital assets, including stablecoins, in the United States.”
While supporting private sector initiatives such as stablecoins, the government also banned the development of a state-led central bank digital currency (CBDC). Some analysts fear this choice may give China and the United States a competitive advantage over the United States.
The comments also follow June 2024 remarks by former House Speaker Paul Ryan arguing that stablecoins may strengthen the United States dollar. At the time he urged lawmakers to develop a suitable crypto regulatory framework:
“A sound, predictable regulatory framework for stablecoins has bipartisan support in Congress and would help dramatically expand the use of digital dollars at a critical time. In an election year, given all the ugly politics to come, we sure could use a win.”
