Stablecoins represent the most effective instrument for the United States government to uphold the dominance of the US dollar in international financial markets, as stated by LayerZero Labs CEO and founder Bryan Pellegrino.
During a conversation with Cointelegraph, the LayerZero Labs CEO, whose team developed the LayerZero interoperability protocol recently selected by Wyoming as the distribution collaborator for the Wyoming stablecoin, remarked that the international accessibility of dollar-linked tokens makes them a clear alternative to enhance the demand for the US dollar. Pellegrino elaborated:
“Stablecoins for the US dollar are the most effective mechanism — the ultimate Trojan Horse or vampire maneuver against every other currency globally — whether it be Argentina, Venezuela, or any nations enduring significant inflation.”
The CEO anticipates that the support for stablecoins will increase at both federal and state levels due to the evident advantages these digital currencies provide to the US dollar in foreign exchange markets, along with the protective barriers that stablecoin-driven demand will establish around the US dollar’s standing as a global reserve currency.
Overview of the stablecoin market. Source: RWA.XYZ
Related: Some stablecoins are not securities, according to new SEC guidelines
US government seeks stablecoins to safeguard the US dollar
Pellegrino highlighted Tether’s rising role as a predominant purchaser of US Treasury bills globally as proof of the appetite for US debt instruments among stablecoin issuers.
Recently, Tether became the seventh-largest holder of US Treasuries, surpassing Canada, Germany, Norway, Hong Kong, and Saudi Arabia.
During the White House Crypto Summit on March 7, US Treasury Secretary Scott Bessent announced that the Trump administration plans to utilize stablecoins to bolster US dollar dominance and indicated this initiative would be a top priority for officials in 2025.
As per a 2023 report released by Chainalysis, over half of all digital asset value transferred to nations in the Latin American region, including Argentina, Brazil, Colombia, Mexico, and Venezuela, was conducted using stablecoins.
The minimal transaction fees, comparative stability, and near-instantaneous settlement times for dollar-linked stablecoins render these tokenized assets ideal for remittances and value stores for individuals in developing nations grappling with high inflation and capital restrictions.
Magazine: Centralized stablecoins undermine Bitcoin payments
