We've been talking about this for about two years, and now it's happening.
Formal laws, clearer regulations, and more policymakers recognizing the benefits will likely speed things up. Right now, stablecoins backed by U.S. dollars are among the top 20 biggest holders of U.S. Treasuries.
The digital economy and online commerce are growing fast, which means easy-to-use digital money is becoming a necessity. AI agents—millions, even trillions of them—are coming, and they’ll need digital payment systems to function.
So far, U.S. dollar-linked stablecoins have become the standard and still dominate, though other options are starting to appear. Policymakers now seem to understand that if they actively support USD-backed stablecoins and make them the go-to choice in digital finance, they can maintain U.S. dollar dominance in the digital world.
This also boosts dollar liquidity. Since USD-backed stablecoins must be backed by real assets, their issuers mainly buy U.S. Treasury debt. That creates more demand for treasuries, which also fund the interest (currently around 4.1%) that stablecoins generate.
Policymakers still have a chance to mishandle this opportunity. Congress is finalizing stablecoin legislation, but details are scarce. It’s unclear whether the final policy will be unfriendly—or even outright hostile—toward non-U.S. stablecoin issuers. If that happens, it could put the $113 billion in U.S. Treasuries held by Tether at risk. As the world’s largest stablecoin issuer, with over $140 billion in circulation, any restrictions on Tether could have major ripple effects.
