Stablecoins as a Way to Extend US Dollar Hegemony

Former United States Speaker of the House Paul Ryan makes a case for how stablecoins could mitigate the looming debt crisis.

Federal Reserve Bank Governor Christopher Waller spoke about the potential benefits and risks of stablecoins at the Institute of Advanced Studies on Oct. 18.

According to Waller, well-regulated stablecoins could reduce the need for payment intermediaries, lowering global payment costs. However, he quickly added that stablecoin “safety is not assured.”

“We must ensure that stablecoins are integrated into the current financial system in a way that complements traditional finance,” Waller said.

The Fed official also highlighted the possibility of a symbiotic relationship between decentralized finance (DeFi) and traditional finance, rather than complete displacement.

This perspective has been echoed by some US lawmakers, who suggest that DeFi and dollar-stablecoins could extend the US dollar's dominance by decades.

Thailand’s oldest bank to offer stablecoin remittance services

An article published in The Wall Street Journal on June 14, authored by former United States Speaker of the House Paul Ryan, argues that stablecoins can help mitigate the looming debt crisis.

Highlighting the growing US government debt, Ryan points to stablecoins creating demand for US Treasurys and US dollars, which will keep the dollar competitive against the Chinese yuan and help it retain its status as the global reserve currency.

More recently, in October, US Senator Bill Hagerty introduced the Clarity for Payment Stablecoins Act, which builds on Representative Patrick McHenry’s 2023 stablecoin bill.

The most significant changes to the bill include provisions to allow states to regulate stablecoins and the removal of a clause in the 2023 bill that would have classified stablecoins as securities.

Despite these efforts, a recent Chainalysis report indicates that the US is lagging in stablecoin adoption.

According to Chainalysis, the market share of stablecoin transactions on US-regulated exchanges fell below 40% in 2024. In contrast, the portion of stablecoin transactions on offshore exchanges increased to 60% this year.

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