Source: Bureau of Labor Statistics – Consumer Price Index, Morris Country Library of Historic Prices

For the Trump administration, legitimising stablecoins could help America advance three strategic objectives.

First, strengthen demand for US Treasury bills (T-bills).

Stablecoins such as USDT (Tether) and USDC (Circle) preserve their 1:1 dollar peg by investing the bulk of their reserves in short-term T-bills. Collectively, they now hold almost $175 billion in US government debt, equivalent to about 3% of the total T-bill market. Each time a stablecoin’s market capitalisation grows, its issuer must buy more T-bills. Looking ahead, projections suggest that stablecoin capitalisation could reach between $1.5 and $3 trillion by 2030. If even a significant portion of these reserves remains invested in T-bills, it would create lasting structural demand for these securities. At a time when the federal government’s financing needs are rising, this dynamic could deepen and expand the T-bill market.

Second, extend dollarisation in emerging markets.

Stablecoins are increasingly used in non-dollarised economies as both a tool for cross-border payments and a store of value. In countries where high inflation erodes household savings, turning to the dollar is a long-standing survival strategy. Yet traditional banks and financial institutions often provide only limited access. Dollar-pegged stablecoins fill this gap by offering a frictionless, digital alternative that reinforces global reliance on the US dollar.

Third, pre-empt the rise of rival digital currencies.

China is accelerating its rollout of the digital yuan (e-CNY), with the central bank’s governor announcing plans for an international hub in Shanghai. The explicit goal is to foster a “multi-polar” currency system less dependent on the dollar. Europe is moving in parallel: the European Central Bank is preparing to launch a digital euro in October 2025. Without a clear US framework for stablecoins, Washington risks ceding ground to these challengers. By embracing stablecoins, the US can strengthen the dollar’s role in the digital era and blunt the geopolitical appeal of alternative currencies. Experiments in de-dollarisation are emerging. BRICS+ countries are increasingly trying to settle commodity trade— especially oil—in bilateral currencies such as yuan, rupees, or rubbles. These efforts attract headlines, but they repeatedly run into structural problems: trade balances are rarely equal, and there are few natural investment outlets for the surplus currency. For instance, Russia has struggled to use the rupees it accumulates from energy sales to India, since those holdings cannot easily be recycled into global assets or converted into gold without passing back through the dollar market.

As a result, these initiatives highlight the limits of non-dollar invoicing: they may work at the margin or for political signalling, but they do not yet constitute a systemic threat to the dollar’s dominance in payments.

This contrast naturally leads to the next question: if the dollar remains unrivalled in transactions, how is it faring in its other role as the world’s reserve asset? 

With central banks holding a record amount of gold, the precious metal has gained around 40% year-to-date. The US are the largest holders, with gold representing around 71% of the country’s total reserves.

China has gone a step further by linking its currency to gold through a multi-layered strategy. Unlike a traditional gold standard, the “gold-backed yuan” initiative does not offer direct convertibility at a fixed rate. Instead, it seeks to bolster confidence in the renminbi through large-scale gold accumulation and expanded trade-settlement mechanisms. China is the world’s largest gold producer and importer, with official reserves above 2,200 tonnes and substantial “off-balance sheet” holdings via state entities and sovereign wealth funds. The Shanghai Gold Exchange, which already operates the largest physical gold market globally, has expanded with international vaults in Hong Kong, Singapore, Dubai, and recently Saudi Arabia, offering yuan-denominated gold benchmarks and physical delivery. These pillars are increasingly tied to China’s digital yuan, designed to integrate with gold settlement systems, smart contracts, and cross-border payment channels. Perhaps most strategically, China has created a “petroyuan” triangle by launching yuan-denominated oil contracts with settlement options in physical gold. Producers like Russia and Iran have begun accepting yuan for crude shipments, creating an alternative to the petrodollar and reinforcing gold’s role as collateral in energy trade.

On the other hand, Bitcoin, often referred to as “digital gold”, has matured into a credible scarcity asset. Like gold, it has a fixed maximum supply, standing at 21 million, which should protect its value from erosion. It is independent from governments. Unlike gold, bitcoin is portable and accessible, with minimal transfer costs.

Policy winds are also turning. A more crypto-friendly US stance has been building for some time, reflected in the appointment of advocates such as Bessent, Atkins, Lummis, the rollback of restrictive guidance, and early steps toward a framework that treats bitcoin as a strategic asset. Already, 22 states have introduced legislation for a bitcoin strategic reserve. Similar debates are emerging abroad: the Swedish Parliament recently tabled a proposal for a national bitcoin reserve, and other sovereigns are exploring the idea of adding bitcoin to their holdings. Nevertheless, bitcoin’s volatility makes central banks cautious. Unlike gold — which has centuries of precedent as a reserve asset — bitcoin remains volatile, limiting its immediate appeal for most monetary authorities.