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Washington is considering a strategy to expand US dollar-backed stablecoins overseas as it seeks to strengthen the dollar’s global reserve status. The plan could also create additional demand for US Treasury securities.
According to Bloomberg, the Trump administration is considering joint ventures with private companies to support wider stablecoin use abroad. Several government agencies could take part in the effort.
The Treasury Department and State Department could play major roles in the initiative. The US International Development Finance Corporation, or DFC, could also work alongside private-sector partners.
The strategy comes as dollar-backed stablecoins already dominate the global stablecoin market. USDT and USDC together represent almost 90% of the USD 292.49 billion market.
Stablecoins are blockchain-based tokens linked to another asset, usually a national currency. Dollar-backed stablecoins maintain their value by holding reserves that support customer redemptions.
Issuers commonly hold US dollars alongside low-risk assets such as short-term Treasury securities. Those investments generate interest while providing liquid assets that issuers can use to meet redemption requests.
The Genius Act established a federal framework for stablecoins after President Donald Trump signed the legislation last year. The law requires issuers to maintain reserves that include dollars and short-term Treasuries.
Treasury Secretary Scott Bessent has described stablecoin growth as a potential tool for supporting the dollar’s international role. The dollar accounts for nearly 90% of foreign exchange transactions, according to figures cited in the provided information.
Stablecoin issuers already hold close to USD 200 billion of US sovereign debt. That amount places the sector among the top 20 holders of US government securities, ahead of several national reserve portfolios.
As a result, wider stablecoin adoption could produce another source of Treasury demand. Greater overseas use could also increase the amount of dollar-linked assets circulating through blockchain-based financial networks.
The proposed strategy could involve the DFC working with private companies on projects that advance US foreign policy objectives. Ben Black currently oversees the agency.
The DFC regularly partners with private-sector groups. Under the potential stablecoin plan, that structure could help Washington promote dollar-based digital payment infrastructure outside the United States.
At the same time, other economies are developing competing digital payment systems. Project mBridge represents one effort to build infrastructure for cross-border transactions using digital currencies. China’s digital yuan forms part of that network. Meanwhile, the European Central Bank continues work on a digital euro.
The ECB also launched a project this week that links blockchain markets with existing European payment systems. These initiatives show that digital payment infrastructure has become part of broader currency competition.
Also Read: Column Stablecoin Platform Connects USDC, USDT with Global Payment Rails
The expansion of dollar-backed stablecoins could create risks for emerging economies, particularly those running current-account deficits and facing persistent capital outflow pressures.
Stablecoins allow users to move money through blockchain networks rather than relying entirely on traditional banking channels. That structure can reduce the visibility authorities have over some financial flows.
As a result, central banks could face greater difficulty tracking movements of money when stablecoin use becomes widespread. Governments could also encounter new challenges when managing domestic liquidity and currency stability.
The risk becomes greater if households and businesses increasingly use dollar-backed stablecoins for everyday transactions. Heavy adoption could weaken demand for local currencies in economies already exposed to external financial shocks.
The International Monetary Fund and Bank for International Settlements have repeatedly warned about those risks. Both institutions have raised concerns about the effect of dollar-linked stablecoins on emerging economies.
Their warnings include the possibility of faster capital flight during periods of financial stress. Easy access to digital dollars could allow funds to leave vulnerable economies more quickly than through traditional channels.
Washington’s proposed stablecoin strategy could expand overseas use of the dollar while creating more demand for US Treasuries. The Genius Act already links stablecoin reserves to dollar assets. However, broader adoption could also intensify capital-flow pressures across vulnerable emerging markets.
