U.S. Treasury Sees Crypto as Key to Dollar Dominance

A New Strategy for American Economic Influence

U.S. Treasury Secretary Scott Bessent sees digital assets as a powerful tool to protect the U.S. dollar's global standing. Speaking at RippleXRP+2.25%'s Swell conference alongside Ripple CEO Brad Garlinghouse, Bessent explained that global influence is shifting fast. In the past, world reserve currencies relied mostly on military power. Today, technological leadership is becoming just as critical.

"We will keep our military umbrella, but I think more and more it's becoming a technology umbrella," Bessent said during the event.

Competing in the Global Technology Stack

Bessent highlighted the growing divide between American and Chinese technology ecosystems. Global businesses and nations must choose whose artificial intelligence models, semiconductors, and financial networks to use. According to Bessent, digital assets are an essential part of that technology stack.

"I think that digital assets are going to be no different, and we are going to win in the digital asset stack, and that's gonna continue to fortify the [U.S.] dollar," Bessent remarked.

This vision offers a broader explanation for the Trump administration's efforts to keep crypto businesses based in the United States, framing digital financial infrastructure as a pillar of national economic strength.

How Stablecoins Support the U.S. Dollar

A core piece of this economic effort involves stablecoins, which are digital tokens pegged 1-to-1 to traditional currencies like the U.S. dollar. The U.S. government recently passed the GENIUS Act to create a federal regulatory framework for stablecoin issuers.

Bessent noted that over 90% of stablecoins worldwide are backed by U.S. dollars. Issuer reserves are primarily held in short-term U.S. Treasury securities. As demand for stablecoins grows globally, demand for U.S. debt grows with it.

"I think it's gonna be an important source of funding for the Treasury," Bessent pointed out.

He also pushed back on concerns that stablecoins merely replace traditional bank dollars. Instead, stablecoins open up new markets by giving people in emerging economies an easy way to protect their savings from local currency inflation.

Overcoming Regulatory Obstacles with Agency Action

Despite progress on stablecoins, federal efforts suffered a setback when Congress failed to pass the Clarity Act, which was meant to establish a comprehensive legal framework for all crypto assets.

While calling the legislative delay disappointing, Bessent stressed that the Treasury can use its convening power to work directly with regulatory bodies like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

By coordinating agency actions, regulators can establish practical guidelines for crypto companies, though agency rules lack the permanent status of congressional laws.

Addressing the Issue of Crypto Debanking

Bessent also addressed the problem of "debanking," where banks cut off services to digital asset businesses due to regulatory uncertainty or pressure.

He reassured industry leaders that regulatory agencies can build strong guardrails and best practices to prevent debanking practices from returning, ensuring crypto businesses retain fair access to banking services.

Recent Market Trends and Industry Developments

The broader crypto sector continues to experience rapid changes alongside policy shifts. Past performance of digital assets or financial platforms does not guarantee future results, and market participants should monitor ongoing volatility.

• Robinhood reported a 55% drop in crypto revenue year-over-year, though overall platform performance beat Wall Street projections.
• Robinhood integrated Ripple's $2.5 billion RLUSD stablecoin, adding choices alongside its support for USDG.
• In international adoption, Brazilian companies turned to stablecoins on election day to hedge against local currency swings.
• Tech giants including Intel, Oracle, and IBM raised objections to tokenized stock trading plans from OKX and ICE.
• Wall Street data infrastructure expanded onchain as CF Benchmarks brought pricing data to decentralized networks.
• Janus Henderson and Centrifuge launched the first licensed fund bringing the Nasdaq-100 onchain.
• BitcoinBTC+0.83% mining firms continue expanding into AI compute power trading to diversify business models.
• On the legal front, a U.S. agency sued Utah to protect Kalshi's prediction market operations.
• In price action, Bitcoin showed short-term weakness, while Ripple's recent banking news has yet to push XRP prices higher.

Real-World Asset Yield Dynamics

Research into real-world asset (RWA) stablecoins shows that productive credit-backed tokens currently offer yields between 5% and 7%, compared to traditional crypto funding rates around 4%.

Yields on digital asset products depend on credit quality, underlying market conditions, and smart contract security. They are not guaranteed return rates nor are they equivalent to bank savings deposits.

Following legislative moves like the GENIUS Act, analysts expect the total addressable market for productive RWA stablecoins to expand to $4 billion over the next three years.