Stablecoin, Bitcoin, US Dollar
Bitcoin-backed Dollar?
Countries adopting a bitcoin standard will be a Trojan horse for continued global dollar dominance.
...imagine the possibility of moving stablecoins around the world, instantly and for nearly zero fees.
Zooming out, we can see that since March 2020, the stablecoin supply has grown from under $5 billion to over $150 billion.
What I find most interesting is not the rate of growth of stablecoins, but which stablecoins are growing the fastest. After the recent Terra/LUNA debacle, capital fled from what’s perceived to be more “risky” stablecoins like tether, to more “safe” ones like USDC.
This is because USDC is 100% backed by cash and short-term debt.
BlackRock is the world's largest asset manager and recently headlined a $440 million fundraising round by investing in Circle. But it wasn’t just a funding round; BlackRock is going to be acting as the primary asset manager for USDC and their treasury reserves, which is now nearly $50 billion.
Tether has been viewed as the unregulated offshore U.S. dollar stablecoin. That being said, Tether sold their riskier commercial paper for more pristine U.S. government debt. They also agreed to undergo a full audit to improve transparency.
If Tether is true to their word and continues to back USDT with U.S. government debt, we could see a scenario in the near future where 80% of the total stablecoin market is backed by U.S. government debt. Another stablecoin issuer, MakerDao, also capitulated this week, buying $500 million government bonds for its treasury.
It was crucial that the U.S. dollar was the main denomination for bitcoin during the first 13 years of its life during which 85% of the bitcoin supply had been released. Network effects are hard to change, and the U.S. dollar stands to benefit most from the proliferation of the overall “crypto” market.
... what if a proliferating stablecoin market, backed by government debt, can help soak up that lost demand for U.S. Treasurys? Is this how the U.S. finds a solution to the unwinding petrodollar system?
Interestingly, the U.S. needs to find a solution to its debt problems, and fast. Nations around the world are racing to escape the dollar-centric petrodollar system that the U.S. for decades has been able to weaponize to entrench its hegemony.
https://bitcoinmagazine.com/markets/united-states-will-back-dollar-with-bitcoin
