Who Gets to Print the Dollar?
Stablecoins promised to democratize money. What they are really doing is forcing a reckoning over who controls it.
In March 2023, the price of USDC, one of the world’s most trusted digital dollars, briefly fell to 88 cents. Nothing dramatic had happened in the crypto world that weekend. No hack, no fraud, no algorithmic collapse. The culprit was Silicon Valley Bank, a conventional Californian lender that had been holding a portion of USDC’s cash reserves when it failed. Within hours, seven of the ten largest stablecoins had lost their pegs. The crisis passed quickly once U.S. authorities stepped in. But the episode revealed something most observers had not fully appreciated: these new private currencies, built on blockchains and marketed as a break from traditional finance, were more entangled with it than anyone had admitted.
That entanglement is the real story of stablecoins. Not the technology, not the volatility, but the fundamental question underneath: in a world where a private company can issue money that billions of people use, who ultimately holds monetary power?
Cash on a Blockchain
To understand what is at stake, it helps to understand what stablecoins actually are, and how they differ from both traditional currency and other crypto assets. Unlike Bitcoin or Ether, whose prices swing violently, a stablecoin is designed to hold a fixed value, almost always pegged 1:1 to the U.S. dollar. As of 2025, roughly 99% of all stablecoin value worldwide is denominated in USD, making this effectively a story about the digital dollar.
The mechanics are straightforward. A user deposits one dollar with a private issuer, with Tether and Circle being the two dominant players, together holding around 80-90% of the market. The issuer mints one digital token on a blockchain and parks the dollar in reserves, typically short-term U.S. Treasury bills or cash equivalents. The token can be sent anywhere in the world, instantly, at minimal cost, and redeemed for a dollar at any time.
The result is something that looks and feels like a bank deposit but lives outside the banking system. No branch, no intermediary, no opening hours. Just a token on a public ledger, moving peer-to-peer across borders with the same ease as a text message. Stablecoins carry no sovereign guarantee: the dollar in your bank account is backstopped by deposit insurance and a central bank with unlimited capacity to create liquidity. A stablecoin is backed only by the private issuer’s reserves and its promise to honour redemptions. That distinction barely matters in normal times. It matters enormously in a crisis.
From Crypto Plumbing to Mainstream Finance
Stablecoins began as a convenience for cryptocurrency traders who wanted to move between positions without touching traditional currency. They have since grown into something far more significant. In September 2025, the total stablecoin market capitalization reached $300 billion, a 75% increase from a year earlier. The number of distinct tokens in active circulation jumped from around 60 in mid-2024 to over 170 by mid-2025.
More telling than the absolute numbers is where stablecoins are going. In 2023, PayPal launched PYUSD, its own dollar stablecoin. Visa and Mastercard began piloting stablecoin-based transaction settlement. A major Wall Street bank described stablecoins as ‘modernising financial infrastructure’. These are not crypto evangelists; they are incumbents recognising a shift.
The shift is perhaps most dramatic in the developing world. In countries with unstable currencies such as Argentina, Nigeria and Turkey, stablecoins have become a practical tool for preserving savings in dollars without navigating capital controls or hunting for physical banknotes. A migrant worker can send remittances home in USDC in minutes, for a fraction of what traditional transfer operators charge. Standard Chartered estimates that roughly two-thirds of all stablecoins outstanding are held as savings by individuals in emerging markets, functioning in effect as informal dollar deposits held outside any local bank.
This is the dimension that makes stablecoins genuinely transformative, and genuinely alarming to many governments. It isn’t just that stablecoins are faster or cheaper. It’s that they allow ordinary people to opt out of their own currency.
Digital Dollarization And the Sovereignty Problem
There is a term economists use for what happens when a country’s population abandons its own currency in favour of the dollar: dollarization. It strips the central bank of its main lever. If people save in dollars, borrow in dollars, and price goods in dollars, domestic monetary policy becomes largely irrelevant. Interest rate decisions stop mattering. The country cedes a fundamental attribute of sovereignty. Stablecoins are enabling a digital version of this process at a speed and scale that was previously impossible. The IMF has warned explicitly that stablecoins may ‘contribute to currency substitution’ and increase capital flow volatility, especially in countries with high inflation or weak institutions. Standard Chartered projected in 2025 that over one trillion dollars of emerging market bank deposits could migrate into stablecoins by 2028 if current adoption trends continue.
“We are going to keep the U.S. the dominant reserve currency in the world, and we will use stablecoins to do that.” - Scott Bessent, U.S. Treasury Secretary
The geopolitics here are asymmetric and rarely discussed openly. There are two critical pillars to dollar dominance: the willingness of the world to save in USD (the ‘reserve currency’ function), and the use of the dollar for cross-border payments, which gives the U.S. geoeconomic leverage including the ability to impose sanctions. These two pillars reinforce each other: the more goods are invoiced in dollars, the more the private sector holds savings in dollars; the more savings are held in dollars, the more natural it is to invoice in dollars. Stablecoins have the potential to deepen both loops simultaneously.
For central banks in emerging markets, this is not a theoretical problem. It is an erosion of operational capacity, unfolding gradually each time another fintech app or wallet adds dollar stablecoin support. But what looks like a threat to monetary sovereignty in Abuja or Buenos Aires looks like a strategic opportunity in Washington. Almost all stablecoins are denominated in U.S. dollars, meaning their global spread effectively extends the reach of American currency into corners of the global economy that the traditional banking system never fully penetrated. Stablecoin issuers must hold their reserves in dollar assets, primarily U.S. Treasury bills, which creates an additional pool of demand for American government debt. The dollar’s share of allocated global foreign exchange reserves has fallen from around 72% at the start of the century to roughly 56% in the latest IMF COFER data. Against that backdrop, stablecoins are increasingly being framed in Washington not just as a payments innovation, but as a tool for reinforcing dollar reach.
3 Blocks, 3 Responses
The regulatory and geopolitical response to this moment has fractured along predictable lines, with the United States, Europe, and China each pursuing a fundamentally different strategy.
The United States has thrown its weight behind private stablecoins through the GENIUS Act, a federal framework that requires issuers to hold high quality liquid reserves, publish regular disclosures, and comply with anti-money laundering and sanctions rules. In effect, Washington has decided that the next layer of dollar infrastructure will be built by regulated private issuers rather than by the state itself. The logic is not novel. It echoes the eurodollar era, when offshore dollar deposits expanded under private control while still reinforcing the global role of the U.S. currency. Stablecoins now promise a similar outcome, only faster, more programmable, and more visibly tied to American legal power.
Europe faces a genuine dilemma. MiCA gives the EU a far tighter regulatory framework than the United States, including restrictions once a stablecoin becomes widely used as a means of exchange within a single currency area. That helps contain domestic dollarization risk. But regulation alone does not create competitive infrastructure. Europe still invoices a large share of its extra EU trade in euros, and the ECB has openly spoken of a “global euro” moment. If stablecoins become the preferred rails for cross border payments and Europe has no credible euro denominated alternative, that ambition could quietly fade.
China is in the most constrained position. Its domestic payments system, led by Alipay, WeChat Pay and the e-CNY, is already more advanced than anything in the West. But its international ambitions for the renminbi are directly challenged by dollar stablecoins. The correspondent banking system has been retreating from parts of the Global South, creating space for China’s CIPS (Cross-Border Interbank Payment System) and Project mBridge (a multilateral CBDC platform designed to settle cross-border payments without routing through the dollar). Dollar stablecoins could leapfrog both. China’s problem is structural. The CNH (Chinese Yuan Offshore) liquidity remains tiny relative to the domestic CNY base, and a managed capital account limits how far Beijing can internationalize its currency. That leaves China facing an uncomfortable choice: accept marginalization in the next payments architecture, or move faster on capital account liberalization than it would otherwise choose.
The Digital Eurodollar And What Comes After
It has become fashionable to predict a future of peaceful coexistence between private stablecoins and public central bank digital currencies. Over 130 countries are currently exploring or piloting CBDCs, in part as a direct response to the stablecoin challenge. Projects like Agorá, a BIS-led tokenisation experiment bringing together seven central banks and more than 40 major financial institutions, are exploring how to preserve central bank settlement while upgrading correspondent banking with blockchain technology. The vision is orderly: each form of digital money occupies its own lane, and regulators ensure the lanes do not collide.
This framing mistakes a geopolitical competition for a technical coordination problem. The question was never whether stablecoins and CBDCs can coexist in the abstract. The real question is whose stablecoins will dominate the next generation of cross-border payments, and what that dominance will mean for monetary sovereignty everywhere else.
The most instructive parallel is the eurodollar market itself. The technology is new. The political logic is not. From the 1950s onward, dollar deposits accumulated outside the United States in private hands, beyond the reach of U.S. reserve requirements. Washington did not suppress this market. It quietly encouraged it, because offshore dollars kept the world on dollar rails at a moment when American monetary dominance was under genuine pressure. The eurodollar market eventually exceeded ten trillion dollars and entrenched the dollar’s position without a single country being asked to vote on it. It became dominant simply by being the most convenient infrastructure available, and because the United States made sure that convenience came with American law embedded inside it.
Dollar stablecoins are following the same logic at greater speed and with explicit government blessing. The GENIUS Act does not tame private stablecoins. It provides just enough institutional backing to make them credible, while keeping them in private hands and under U.S. jurisdiction. Tether and Circle are not merely payment companies. They are, in effect, the operational layer of a new dollar-denominated monetary system for the global economy — one that extends Washington’s sanctions architecture into payment corridors that the traditional banking system never fully reached.
The opening promise of this technology was democratization: cheaper remittances, savings accounts for the unbanked, financial access without gatekeepers. That promise is not entirely false. A migrant worker sending money home in USDC, or an Argentine family preserving savings in a dollar token beyond the reach of domestic inflation, is experiencing something genuinely new. But the infrastructure enabling that freedom is owned, regulated, and ultimately shaped in Washington. The access may be more open. The system is not more neutral.
For Europe, the window to establish a credible euro alternative narrows with each quarter that dollar stablecoin volumes grow. For China, the deeper constraint may be the capital account rather than the technology itself. For emerging markets, the choice may look much as it did in the eurodollar era: use the infrastructure that works, or build something slower from scratch.
What comes next is unlikely to look like tidy coexistence. It looks more like the emergence of a digital eurodollar system, privately operated, globally available, and increasingly tied to U.S. law. Money has always been a political institution. Stablecoins change the plumbing. They don’t change that fact.
This article was co-written by the Digital Disruption Chair and Mingyou Yuan, student of the 2026 Cergy Cohort.
This week’s curated news:
The biggest US power grid is under strain from AI
PJM Interconnection, the largest US power grid operator, is under growing pressure as AI data centers drive a surge in electricity demand. The issue is not just that demand is rising, but that PJM’s market design and connection process were built for a slower energy system. After pausing new generation applications in 2022, PJM is now facing hundreds of new requests while utilities, politicians and consumers push back against rising power prices. The deeper tension is that AI infrastructure is forcing electricity markets to modernize much faster than regulators and grid operators are used to moving.
Read more here
AI mania masks the corporate hit from the Iran war
Global businesses are feeling the shock of the Iran war, from airlines cutting flights to consumer companies warning of price rises. Yet the world’s largest listed companies have still added more than $5.4tn in value since the conflict began, largely because AI enthusiasm has overwhelmed the market impact of geopolitical risk. Semiconductor companies account for most of the gains, with investors treating chips and Big Tech as safer earnings stories in a period of macro uncertainty. The result is a split market: AI and energy are rising, while consumer goods, luxury, autos, mining and some defence groups are absorbing the costs of disruption.
Read more here
Koreans flock to pay with their faces
South Korean fintech Toss is betting that facial recognition will become a mainstream payment method, after signing up 4.8mn users for FacePay since September. The service is already available in about 330,000 retail outlets and lets users pay with a face scan after registering through the app. South Korea’s cashless habits, comfort with biometrics and appetite for convenience make it a strong testing ground for the technology. But the story also highlights 2 challenges of biometric payments: they may be faster and harder to hack than passwords, but if facial data is breached, it cannot be replaced like a card number or password and if adoption is quick with Korean consumers who tend to value convenience, “western consumers can be more sensitive about privacy and personal information”.
Read more here
This article is part of the Digital Disruption Chair’s ongoing analysis of frontier technologies. Explore the 2025 Digital Disruption Matrix for a comprehensive ranking of this year’s most disruptive technologies.
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