Day: September 27, 2025

We saw earlier that USD is falling out of favour with all countries. They are putting their eggs in different baskets. In answer, the US has given a modicum of authenticity and reliability to stable coins provided the coin issuer backs it up with purchases of US bonds. Thus a dollar put in stable crypto coins, is a dollar invested in US treasuries.

What can Europe / China / Japan do about this?

They can play their own masterstroke.

Each can pass its own version of the Genius Act.

Thus each country can have crypto exchanges which issue stable coins based on that country’s currency.

E.g. a stable coin worth a guaranteed one euro, a stable coin worh a guaranteed Renminbi or even a Yen.

So issuers of these stable coins would need to hold bonds of these currencies of the same value for which the stable coins have been issued. The audits would be by the respective country governments.

Wow! So we will have USD stable coins, Euro stable coins, etc.

Now let us see how the US govt stacks up against these other heavy weights.

Already those who are heavily committed to the USD are ruing the fact. Nimble market players including drug cartels, are certain to use the stable coins which are backed by the currency which they feel will remain the strongest bet in retaining its value.

The US is in for some tough shocks.

Countries around the world have realised that the dollar is not such a nice thing to have. Hardly a good store for wealth.

So they have diversied over the past year into a basket of currencies other than USD, into gold, and so on.

This spells trouble for the USA as it has to keep on issuing more bonds every year to finance its free lunch. A country which decides to moderately shift its exposure will drastically drop its fresh purchases of the dollar, even if it refrains from selling the bonds to protect its own investment.

So to whom does the US palm off its snake oil i.e. its greenback currency?

Trump stumbled on an idea. He brought the Genius Bill. This bill focuses on stablecoins, setting up regulatory guidelines for this form of digital currency across the United States. It gives legitimacy to stablecoins and effectively puts them on a perch as a legitimate safe currency to deal in. Provided, there is a provided of course, the stable currency issuer should back it with equal amount of USD or Treasury Bonds purchased. Thus just like earlier USD had a currency backed by gold, now we have a currency (or will have), in the form of stable coins of myriad hues, which are backed by the USD.

Thus as the world moves to stable coin, the US is guaranteed a huge stash of its IOU’s in perpetual dead stock, being used just as a counter weight to the stable coins issued.

Buy prey, who will buy a stable coin, when I can very well buy a USD for the same money? Answer is simple – drug lords, money laundering operations, illicit money generators etc. For the difference between USD and stable coin worth one USD is that the USD can generate interest. The stable coin sits like a dead duck.

 

Trump is going about it all wrong.
He should institute a Donald Trump Prize and award it to Alfred Nobel!