TLDR

While interest rates are grabbing headlines, another story is quietly unfolding: the U.S. dollar. Many speculate it could be replaced by the yuan, a BRICS currency or even a digital currency. But the reality is simple, and that is that nothing is close to replacing the dollar today. In fact, one digital currency may strengthen the USD—Stablecoins.

This note explains what stablecoins are, how they amplify the power of the dollar, and how their digital format efficiently supports dollar dominance. It also suggests that they can deliver Washington with a grip on the digital Eurodollar network that it never had with traditional Eurodollars.

First, some definitions and refreshers.

What is a stablecoin?

A stablecoin is a digital token pegged 1:1 to a fiat currency, usually the U.S. dollar. Unlike other cryptocurrencies, it provides stable, digital liquidity.

There are three main types. Fiat-backed stablecoins, like USDC or Tether, are backed by cash or Treasuries. Crypto-backed coins, such as DAI, are over-collateralised with cryptocurrency. Algorithmic stablecoins rely on code to manage supply and are higher risk.

In short, stablecoins are digital claims on real assets, offering trust and liquidity.

The Eurodollar market is the Force

The Eurodollar market is a vast, unregulated network of dollars held in offshore bank accounts, operating beyond the Federal Reserve’s control. It’s the Force.

It binds the global financial system, shaping liquidity and interest rates in ways central banks can’t fully predict. Just as Jedi and Sith harness the Force, institutions and others use Eurodollars to fund operations, invest, hedge, refinance, and manage risk.

It fuels both booms and crises. However, it carries fractionalisation risk due to fractional banking and sits outside the purview and control of the Fed.

Stablecoins on the other hand are the digital evolution of this Force. Dollar-denominated, circulating globally, used for payments, trading, and cross-border settlement, yet fully backed, avoiding traditional fractional risk. This new Digital Force is a modern, programmable extension of the dollar, and increasingly under U.S. regulation (GENIUS Act).

The U.S. response is set out in the GENIUS Act

The GENIUS Act defines payment stablecoins, sets rules for issuers, requires reserves in U.S. cash or Treasuries, mandates transparency, and extends oversight to foreign issuers serving U.S. users (also requiring reserves to be in U.S. cash or treasuries).

The effect is clear. Legitimising and regulating stablecoins while anchoring them to the U.S. dollar, reinforcing king dollar as the global reserve currency.

Examples in practice

USDC (Circle) and Tether are fully backed, increasingly transparent, and widely used. DAI is decentralised, crypto-collateralised, and programmable. These coins extend digital dollar liquidity, again, amplifying the U.S. dollar’s reach and supremacy.

How stablecoins reinforce the dollar

Every token circulating in crypto markets, cross-border payments, or DeFi platforms is a digital claim on real dollars (not a bank deposit that is not fully reserved), expanding the dollar’s reach.

Regulated stablecoins also anchor foreign users to the dollar, reinforcing demand rather than threatening it.

Real-time settlement, auditable reserves, and transparent governance extend the dollar’s influence into digital markets.

Like the Eurodollar market was the Force, stablecoins form the Digital Force. Global, programmable, fully backed, and anchored to the dollar. The Digital Force increases global demand for dollars, strengthening the U.S. currency against others. Dollar-denominated commodities like copper, oil, and coffee may become more expensive for non-U.S. buyers.

At the same time though, stablecoins improve digital dollar availability, boosting settlement efficiency and partially offsetting price pressures.

And while we’re currently seeing cyclical dollar weakness, the result may be a stronger, more agile dollar circulating efficiently, worldwide.

Washington cares a lot

By regulating stablecoins under the GENIUS Act, the U.S. gains more control over the digital Eurodollar than it ever had over traditional Eurodollars, enforcing reserve requirements, issuer oversight, programmable compliance, and global visibility.

This is why the Trump administration wanted the U.S. to lead the world in stablecoins and be the first out of the gate. It’s not just about innovation; it’s about ensuring that King Dollar remains dominant, now in digital form, and that America retains strategic and financial influence in the next era of global finance.

Takeaway

Stablecoins don’t threaten the dollar standard. They amplify it, reinforcing dollar dominance in digital form, while giving Washington new tools of accessibility, efficiency, and oversight.

The Digital Force strengthens U.S. monetary power across borders, smoothing liquidity flows, and as first mover, handing Washington a grip on the digital Eurodollar system it never had with the old one.

It’s all part of positioning Washington-regulated stablecoins as the digital USD standard for Web3 💥

See you in the market.

Mike

Rise of the digital force, stablecoins and king dollar