Dollar-Backed Stablecoins Exceed 98% of Market, a Boon for the U.S. with Potential Downsides

(SeaPRwire) –   Stablecoins, a form of cryptocurrency pegged to a real-world asset, are increasingly becoming integrated into the global financial system, with major companies such as Visa and Stripe moving quickly to offer them. These digital currencies are predominantly backed by the U.S. dollar; while euro-denominated and gold-backed stablecoins exist, over 98% of the total market supply is tied to the dollar—a development experts say will have significant implications for the future of the world economy.

Speaking at the Milken Institute conference in Beverly Hills on Tuesday, Haseeb Qureshi, a partner at venture capital firm Dragonfly, observed that stablecoins are weakening the traditional control governments have maintained over their citizens’ access to money and financial assets.

“Stablecoins are inherently disruptive,” he stated. “For most people around the globe, capital controls restrict the ability to hold any financial assets they choose.”

In practical terms, this suggests that an increasing number of individuals worldwide may begin using U.S.-dollar-denominated stablecoins for both transactions and personal savings. This shift will be driven by how easily these digital dollars can be transferred across the internet.

Barry Silbert, founder of the crypto conglomerate Digital Currency Group and a billionaire investor, noted that this trend could benefit the United States by reinforcing the dollar’s position as the dominant global reserve currency. As more people rely on the dollar through stablecoins, it could strengthen America’s geopolitical influence.

Silbert predicted that in response, some countries may seek to develop centrally controlled digital currencies known as central bank digital currencies (CBDCs). China is already advancing its digital yuan, but because CBDCs lack global interoperability and come with extensive government surveillance, they are unlikely to challenge dollar-based stablecoins effectively.

All of this, according to Silbert, represents part of a broader transformation in finance called tokenization—the process of recording various investable assets on blockchain networks. He believes this shift will make it far easier to view and transfer assets across borders, ultimately blurring the lines between public and private markets and merging U.S. and international capital markets.

However, Silbert warned that many have overlooked the potential downsides of widespread adoption of dollar-backed stablecoins. The most concerning consequence, he said, is that greater global reliance on the U.S. dollar may make it harder for the American government to curb excessive spending, which has pushed the national debt-to-GDP ratio above 100%—a level not seen since World War II.

Under normal circumstances, market pressures would encourage fiscal discipline from the federal government. But if stablecoins stimulate strong foreign demand for U.S. dollars, Silbert fears policymakers may continue relying on expansive monetary policies without constraint.

“I’m concerned about giving the U.S. government and Treasury the power to print unlimited U.S. dollars,” Silbert cautioned. “Throughout history, governments have repeatedly undermined their own currencies.”