Recently, many of you might be wondering why President Donald Trump is endorsing stablecoins and why related legislation is being swiftly passed in the U.S. Congress. Is it simply to revitalize the cryptocurrency market? Not at all. There's a much deeper and more complex U.S. economic strategy at play here. Today, I'll explain, in clear and simple terms, the core reasons behind Trump and the U.S. government's aggressive promotion of stablecoins, the background, and the potential impact on us.
1. Stablecoins: Value Beyond 'Stability'
First, let's understand what a stablecoin is. As the name suggests, it's a cryptocurrency designed to maintain a 'stable' value. Unlike general cryptocurrencies such as Bitcoin, which experience significant real-time price fluctuations, stablecoins are pegged 1:1 to a specific asset (usually the U.S. dollar), resulting in almost no price volatility. It's as stable as the cash we use in our daily lives.
However, in the past, there was a major failure when stability relied solely on algorithms. This was the 'Terra-Luna incident,' where an algorithmic attempt to peg to the dollar 1:1 failed because it wasn't backed by real assets, leading to a collapse. After this incident, stablecoins emerged that are actually backed by real assets like U.S. dollars or U.S. Treasury bonds. Tether and Circle, which currently dominate the market, are examples of such stablecoins.
2. The 'New Savior' for U.S. Treasury Bonds: Stablecoins
So, why are stablecoins important to the U.S. economy? It's directly linked to U.S. Treasury bonds. The U.S. faces massive fiscal deficits every year, and to cover these deficits, it must continuously issue Treasury bonds. When a large volume of bonds is issued, their price tends to fall, which in turn leads to higher interest rates, putting a burden on the U.S. economy.
This is where stablecoins can act as a 'savior.' Let's take Tether as an example. When someone buys 1 Tether with 1 dollar, Tether uses that dollar to buy U.S. Treasury bonds, which typically offer interest. This means that as more Tether is issued, a new, massive buyer for U.S. Treasury bonds emerges.
Surprisingly, Tether's holdings of U.S. Treasury bonds amounted to a staggering 101.1 billion dollars as of September 2024. This is comparable to the volume of U.S. Treasury bonds held by the central banks of South Korea or Germany! Furthermore, with China continuously reducing its U.S. Treasury bond holdings, Tether ranked third among new purchasers of U.S. Treasury bonds in Q3 2024, demonstrating its immense influence. Circle is also known to have purchased tens of billions of dollars worth of U.S. Treasury bonds.
Ultimately, if stablecoins continue to purchase U.S. Treasury bonds, bond prices can remain stable, and upward pressure on interest rates can be alleviated, providing the U.S. government with breathing room in its fiscal management. Considering that President Donald Trump is very interested in lowering 10-year Treasury yields, stablecoins become a very attractive alternative.
3. 'GENIUS Act': The U.S.'s Grand Plan to Protect Dollar Hegemony
President Donald Trump's support for stablecoins is not just a personal opinion. In March 2025, the U.S. Senate passed the GENIUS Act, a stablecoin-related bill. As its name suggests, this bill embodies a grand scheme, like a 'genius,' to protect the U.S. dollar and its Treasury bonds.
The core of the GENIUS Act is to bring stablecoins into the regulated financial system and clearly define their regulations. A particularly crucial provision is the '1:1 reserve requirement.' This mandates that 100% of stablecoin issuance must be backed by safe assets like the U.S. dollar or U.S. Treasury bonds. This creates a structure where new U.S. Treasury bonds must be purchased every time a stablecoin is issued, securing a stable demand source for the U.S. Treasury market.
This bill passed the Senate with overwhelming bipartisan support, and President Donald Trump has actively welcomed it. Even U.S. Treasury Secretary Scott Bessent stated that "the stablecoin legislation will expand the global use of the dollar, and the stablecoin market will grow to 3.7 trillion dollars (about 5,000 trillion won) by 2030," noting that this would be like gaining a 'new VVIP customer' capable of purchasing five times the amount of U.S. Treasury bonds held by China.
4. Expanding Dollar Influence: Stablecoins' Global Ripple Effect
The influence of stablecoins isn't limited to the U.S. Treasury market. In developing countries with low trust in their domestic currencies, or those with complex and costly foreign exchange remittance procedures, stablecoins are likely to become a common means of payment. The more people use dollar-backed stablecoins, the more naturally they will be integrated into the dollar economic sphere, further strengthening the dollar's international dominance.
Recently, in this trend, Circle, a pro-U.S. stablecoin, listed on the New York Stock Exchange, and its stock price surged, reflecting high market expectations.
In conclusion, the U.S. is employing a 'two birds with one stone' strategy through stablecoins: resolving the instability of the Treasury market caused by fiscal deficits and simultaneously solidifying the dollar's global hegemony. This is not merely a cryptocurrency issue but a significant movement that could reshape the global economic landscape.