The dollar, as the world's primary reserve currency, accounts for 58% of foreign exchange reserves and over 40% of international payments, making it difficult to replace in the short term. Cryptocurrencies like Bitcoin are highly volatile and are more often seen as speculative assets rather than currency alternatives.
Stablecoins like USDT and USDC are pegged to the US dollar at a 1:1 ratio, effectively expanding the dollar's usage globally. For instance, in high-inflation countries like Argentina and Turkey, people hold dollars through stablecoins as a hedge, indirectly enhancing the dollar's influence.
The U.S. is promoting the compliance of stablecoins, requiring issuers to maintain transparent reserves and accept regulation, while cracking down on non-dollar stablecoins (like Terra's UST) and non-compliant exchanges to maintain the dollar's dominance in the digital currency space.
Additionally, stablecoins can help the dollar respond to competition from central bank digital currencies like the digital yuan, and supplement the SWIFT system in cross-border payments, ensuring that settlements still rely on the dollar system.
However, risks remain, such as the lack of transparency in stablecoin issuers' reserves potentially leading to runs, or decentralized technology undermining regulatory control.
Overall, the U.S. is incorporating stablecoins into the dollar hegemony system, guiding innovation through regulation while suppressing potential threats. The key in the future will be whether the U.S. can maintain stability in the stablecoin market and the acceptance of the dollar's digital currency by other countries.#BTC