According to Cointelegraph, Circle's USDC stablecoin has been introduced on the XRP Ledger (XRPL), marking a significant development for users of this layer-1 blockchain network. This launch allows investors to utilize XRP as a bridge currency, facilitating the transfer of stablecoins between decentralized exchanges (DEXs) through an auto-bridging feature. Markus Infanger, RippleX's senior vice president, emphasized the importance of stablecoins as crucial entry points that connect traditional financial markets with the crypto space, focusing on utility rather than speculation.
The introduction of USDC on the XRPL coincides with efforts to establish comprehensive stablecoin regulations in the United States. The stablecoin sector has grown to a market capitalization exceeding $237 billion, carrying geo-strategic and macroeconomic implications. Overcollateralized stablecoin issuers typically purchase short-term US Treasury bills to back their digital fiat tokens, profiting from the yield of these government securities. A growing number of U.S. lawmakers and officials view stablecoins as a tool to counter de-dollarization, as foreign countries offload U.S. government debt due to concerns over the creditworthiness of the U.S. government and the declining value of the U.S. dollar.
As sovereign powers divest from U.S. debt instruments, bond yields rise, with investors demanding higher interest payments to lend to the government. The yield on the 10-year U.S. Treasury Bond currently exceeds 4.3%, contributing to increased debt service costs for the government. This situation exacerbates the $36 trillion national debt, making it more expensive to maintain and inflating the principal amount owed. This creates a cycle of debt monetization to repay creditors and fund the budget. During the White House Crypto Summit on March 7, U.S. Treasury Secretary Scott Bessent pledged to prioritize stablecoin development to protect U.S. dollar hegemony by leveraging stablecoin demand to enhance the global salability of the U.S. dollar.
However, critics of the fiat system, such as Bitcoin advocate Max Keiser, argue that the strategy to bolster declining demand for the U.S. dollar with stablecoins will merely delay the dollar's inevitable collapse. Keiser suggests that stable tokens backed by gold will outperform dollar-pegged stablecoins due to gold's high stock-to-flow ratio, which safeguards its value against rapid inflation and price depreciation.
