According to David Sacks, the crypto czar appointed by Donald Trump himself, the Donald Trump administration intends on regulating and enabling stablecoin innovation in America. Sacks revealed that stablecoins are one of the main focuses for the Trump administration, in addition to goals for advancing Bitcoin adoption and blockchain infrastructure, speaking on CNBC’s Closing Bell Over Time on Feb. 4. He pointed out that the stablecoin market is booming but has mostly taken place outside the US, expressing a goal to “bring that innovation onshore.” A fledgling industry that is worth around $227 million, a whopping 97% of the stablecoin skimming is made up of US-pegged stablecoins like Tether’s USDT, which accounts for more than 60% of the total market capitalization, according to data from CoinGecko.
Will the Future ‘Digital Dollar’ Be in Stablecoins?
Sacks explained that stablecoins could have a role in increasing the US dollar’s level of international dominance and extending its digital usage. The adoption of stablecoins, he argued, could result in “potentially trillions of dollars of new demand” for US Treasurys, which could help manage the national debt and bring down long-term interest rates. Emphasizing stablecoins’ potential benefits, Sacks noted that they help solidify the US dollar’s dominance in the world of finance.
On January 23, Trump signed an executive order that reaffirmed the administration’s intention to maintain the sovereignty of the dollar and, among other things, to encourage the development and growth of legal, U.S.-dollar-backed stablecoins around the world. The order also directed the US government to develop and issue a central bank digital currency (CBDC) but made it clear that US stablecoins are a form of digital dollar.
White House Legislative Aspirations and USDC Regulation
Sacks said that the White House plans to work on legislation that facilitates the issuance of stablecoins as part of its stablecoin strategy. Circle’s USD Coin (USDC), for example, is already issued and regulated within the US, with the company calling its stablecoin “regulated and fully reserved.” USDC is the second-largest stablecoin after USDT, accounting for 24% of the total stablecoin market cap.
Unlike USDC, which is generally considered a regulated stablecoin, Tether’s USDT has faced challenges in areas such as the European Union, where it is increasingly seen as noncompliant.
On the other hand, USDC has also gained legal status in many other international markets, including Canada and EU countries, and in July 2024, became the first stablecoin issuer to operate under the Markets in Crypto-Assets Regulation framework.
