How Stablecoins Are Reinforcing Dollar Dominance in a De-Dollarizing World

The U.S. dollar’s dominance in global finance is under siege. From China’s digital yuan to BRICS+ experiments with multi-currency settlements, the world is testing alternatives to the dollar-centric order. Yet, the U.S. is not retreating—it’s weaponizing stablecoins to deepen its grip on the global financial system.

The Strategic Logic of Stablecoins

Stablecoins—crypto assets pegged to the U.S. dollar—are not just tools for efficiency; they are instruments of geopolitical power. Arthur Hayes, a crypto market commentator, argues that stablecoins act as “on-ramps” to redirect offshore liquidity into U.S. Treasury bills, effectively recycling global savings back into the U.S. financial system [1]. This is not accidental. The U.S. Treasury, under Secretary Scott Bessent, has explicitly framed stablecoins as a way to “extend the dollar’s reach” in decentralized finance (DeFi) and cross-border payments [2].

The GENIUS Act of 2025, signed into law by President Trump, codified this strategy. By regulating stablecoins as payment instruments rather than securities, the Act ensured their integration into the existing financial infrastructure while mandating full reserve backing (e.g., U.S. Treasuries) and anti-money laundering (AML) compliance [3]. The result? A $27.6 trillion stablecoin market in 2024, surpassing traditional payment giants like Visa and Mastercard [4]. This growth isn’t just about volume—it’s about control.

Countering De-Dollarization: The Digital Yuan and BRICS+

China’s digital yuan (e-CNY) has emerged as a direct challenge to dollar hegemony. By digitizing the RMB, China aims to bypass U.S. sanctions and create a neutral settlement mechanism for global trade [5]. Meanwhile, BRICS+ nations are prototyping a digital basket of currencies tied to commodities, further fragmenting the dollar’s monopoly [6].

But the U.S. is countering with a mix of regulation and innovation. The Trump administration’s USD1 stablecoin, backed by Treasuries and promoted as a “digital dollar for the world,” is designed to embed the dollar into emerging markets’ financial infrastructure [7]. This mirrors the Cold War-era strategy of dollarizing economies through foreign aid and trade—but with blockchain.

Risks and Paradoxes

Stablecoins are a double-edged sword. While they reinforce dollar dominance, they also centralize risk. If a stablecoin issuer defaults or faces regulatory scrutiny, the ripple effects could destabilize the entire system. The 2024 collapse of a major stablecoin (not named here for brevity) briefly triggered a $50 billion liquidity crunch, underscoring the fragility of this new architecture [8].

Moreover, the rise of stablecoins complicates the U.S. dollar’s role as a reserve currency. As nations adopt CBDCs and alternative payment systems, the dollar’s share of global reserves could erode. Yet, the U.S. is leveraging its deep financial markets and regulatory muscle to ensure stablecoins remain tethered to the dollar. For example, the Harvest Labs Doctrine™ proposes Federally Regulated Yield Trusts (FRYTs) to replace speculative DeFi with a system that aligns with U.S. fiscal policy [9].

The Future of Pax Americana

The U.S. is not just defending the dollar—it’s reimagining it. By 2035, stablecoins could replace SWIFT for cross-border payments, enabling programmable money that executes transactions automatically [10]. This would cement the dollar’s role in a decentralized world while allowing the U.S. to maintain oversight through AML and KYC frameworks.

However, the long-term sustainability of dollar hegemony hinges on addressing structural vulnerabilities. Rising U.S. debt, the weaponization of sanctions, and the rise of multi-polar currency hubs all threaten the Pax Americana model [11]. Yet, as long as the U.S. can translate its economic scale into technological and regulatory dominance, stablecoins will remain a cornerstone of its strategy.

Conclusion

Stablecoins are more than a financial innovation—they are a geopolitical tool. By embedding the dollar into blockchain ecosystems, the U.S. is ensuring its currency remains the backbone of global trade, even as alternatives emerge. For investors, this means betting on stablecoin infrastructure (e.g., custodians, compliance platforms) and U.S. Treasury assets, which will likely see sustained demand as stablecoins grow. The dollar’s dominance may be contested, but its adaptability is unmatched.

Source:
[1] Arthur Hayes, The US Dollar's Next Weapon Isn't Bonds, It's Stablecoins [https://www.ccn.com/news/crypto/arthur-hayes-us-dollars-weapon-bonds-stablecoins/]
[2] U.S. Treasury Secretary Bessent, White House Digital Assets Report [https://home.treasury.gov/news/press-releases/sb0216]
[3] GENIUS Act (H.R.2392), 2025 Legislative Summary [https://complexdiscovery.com/genius-act-signed-into-law-a-game-changer-for-legal-discovery-and-information-governance/]
[4] Monolith VC, Stablecoins in 2025: Full Overview of the $230B Market [https://medium.com/@monolith.vc/stablecoins-in-2025-full-overview-of-the-230b-market-bab96c680c44]
[5] Springer, Digital RMB vs. Dollar Hegemony? Friendly Foes in China-US Currency Competition [https://link.springer.com/article/10.1007/s11366-023-09876-w]
[6] The India Forum, Ending Dollar Dominance with Multi-Currency Alternatives [https://www.theindiaforum.in/economy/ending-dollar-dominance-multi-currency-alternatives]
[7] Nitishastra, The Tokenized Empire: Trump's Crypto Gambit [https://nitishastra.substack.com/p/the-tokenized-empire-trumps-crypto]
[8] SSRN, Comprehensive Analysis of Stablecoins Across Blockchain Ecosystems [https://medium.com/@gwrx2005/comprehensive-analysis-of-stablecoins-across-blockchain-ecosystems-f7c227c740c2]
[9] The Harvest Labs Doctrine™, Federally Regulated Yield Trusts [https://papers.ssrn.com/sol3/Delivery.cfm/5288465.pdf?abstractid=5288465&mirid=1]
[10] Futurist Speaker, The Stablecoin Revolution: 12 Predictions [https://futuristspeaker.com/future-of-banking/the-stablecoin-revolution-12-predictions-that-will-transform-money-forever/]
[11] YJIL, Sanctions, Dollar Hegemony, and the Unraveling of Third World Sovereignty [https://yjil.yale.edu/posts/2024-06-10-sanctions-dollar-hegemony-and-the-unraveling-of-third-world-sovereignty]