Peter Schiff, an economist and critic of U.S. monetary policy, recently expressed his concerns about stablecoins and their role in securing the dominance of the dollar.
In a series of posts on X, he argued that it is unlikely that stablecoins will preserve the role of the U.S. dollar as the world's reserve currency. Furthermore, he emphasized that their main function will continue to be cryptocurrency trading, rather than their broader economic application.
Peter Schiff believes that stablecoins will not play a key role in securing the future of the dollar.
In his statements, he pointed out that the main use of stablecoins is cryptocurrency trading, rather than as a mechanism for broader economic transactions. He also warned that the increase in the U.S. federal budget deficit and rising inflation would reduce the demand for interest-free and dollar-pegged stablecoins.
His statements arose amid concerns about the loss of purchasing power of the U.S. dollar in light of the growing national debt. According to Schiff, as the government's fiscal situation deteriorates, the demand for stablecoins as a store of value will decrease. He added that stablecoins are simply not prepared to serve as a stable and reliable wealth reserve in an environment characterized by high inflation and fiscal instability.
Stablecoins have been hailed as a relatively stable response to the volatility of cryptocurrencies like Bitcoin. However, Schiff's statements reflect a widespread doubt about their long-term utility. With rising inflation, stablecoins may not offer the yield and stability that investors expect.
Peter Schiff suggested that the lack of interest-generating features in dollar-pegged stablecoins makes them an unattractive option as a hedge against inflation.
At the same time, Peter Schiff not only expressed his opinions regarding stablecoins but also commented on the Federal Reserve's monetary policy and the attack made by President Donald Trump on Jerome Powell, the Fed's chairman.
According to Schiff, the Fed does not need to lower interest rates, but he suggested that this gradual degradation and Trump's intimidation, by asking him to take action, would likely not be well received. Schiff indicated that the political pressure Trump exerted on the Fed could incentivize the central bank to be less responsive to act, as reducing rates would be seen as a political decision rather than an economically necessary one.
While Schiff criticizes stablecoins, other figures, such as Treasury Secretary Scott Bessent, have a more optimistic view of their potential role. Bessent recently stated that stablecoins could reinforce the supremacy of the U.S. dollar. He insisted that digital assets, including stablecoins, are among the most significant global phenomena and should not be ignored by national governments.
According to Bessent, stablecoins could drive significant demand for U.S. Treasury bonds, as they are often backed by these government securities.
This demand could reduce the U.S. government's borrowing costs and help address the national debt. Additionally, Bessent suggested that the approval of laws like the GENIUS Act could boost the growth of the stablecoin ecosystem, potentially creating millions of new users in the dollar-based digital economy.
Follow me for more analysis and news, give a 👍 and share, that would help me a lot to keep growing.
