In the middle of all the noise about Epstein and Ankles at the end of last week, Donald Trump discreetly launched a revolution in the global monetary and payment system.
The announcement has not gone entirely unnoticed, but with anger and fury that bubble in American society at the moment, it has not completely obtained the exhibition it deserved.
This is called the “creation and establishment of national innovation for us Stablecoins Act”, a bill with harmless consonance which condenses in a small neat acronym.
“The act of genius, they named it,” said Trump in a rare moment of lightness and without the slightest suspicion of irony.
Donald Trump has signed the “law of guide and establishment of national innovation for the Stablescoins” or “Genius Act” law, providing the regulation of payment stables. (Reuters: Jonathan Ernst))
Largely presented as a means of providing credibility to the cryptography industry, and exhibitions to the family businesses of the American president, this decision will have large -scale impacts on the global financial system and the American economy.
Most of the attention in the direction of the death of the bill focused on the president’s personal exposure to cryptocurrencies. And for a good reason.
Five years ago, towards the end of his first mandate, Trump denounced Bitcoin and cryptocurrencies like “a scam”.
But before last year’s elections, he announced a lighter touch to cryptography regulations.
The new regulators having a more benign attitude towards the industry would replace those who brought Sam Bankman Fried – the FTX magnate is now serving a sentence of 25 years in prison – to justice after one of the greatest financial collapses in history.
This commitment has seen enormous quantities of donations pouring faithful from the cryptographic industry.
And, in the aftermath of the elections, the president and his wife launched their own pieces even – increasing about 2.7 billion US dollars – as well as the launch of World Liberty Financial, a cryptocurrency company led by its sons and other sales partners.
Although conflicts of potential interests are disturbing, the bill could reshape the functioning of global finance and trade flows.
Not so stable
The Stablecoins have not always been up to their name. Sometimes they were anything but.
When the cryptocurrency industry collapsed on itself three years ago, a stablecoin called UST-which had little active support-was suddenly exceeded from the US dollar, resulting in the collapse of two large cryptocurrencies, Terra and Luna.
Investors have lost tens of billions of US dollars.
Investors have lost tens of billions of US dollars when cryptocurrencies Terra and Luna collapsed. (Reuters: Dado Ruvic))
But the concept has survived and the stablecoins, unlike many other cryptographic applications, have a useful objective. They can transfer money in an instant and at a minimum cost with any of these boring transfer costs.
Stablecoins are named as such because they are fixed to a fiduciary currency, generally the US dollar. Unlike other cryptocurrencies like Bitcoin, the price does not change or, at least, should not.
To be really stable, however, they must be supported by assets that can be easily exchanged in US dollars, assets such as US Treasury bills and US government obligations, mainly American public debt.
For years, they have been mainly used in countries with unstable currencies like Turkey. But it changes now.
During the last year, stablecoin transactions exceeded 33 billions of dollars, far exceeding that of Paypal and even the visa, a trend that is in its infancy.
This sudden sudden transactions and the rise of stablecoins began to move the debt market of the American government.
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Tether, the largest stablecoin, emerged last year as the seventh largest buyer in American treasury bills and between them, the Stablecoins now collectively hold 128 billion US dollars in American treasury, which is more than sovereign holders such as Germany, Saudi Arabia and South Korea.
This change occurs at the same time that the US dollar loses its brilliance and that questions are raised on the role of America as a global reserve currency.
Although there is no obvious interploping, another currency to take its place as a global reserve, confidence in America stands out, as this graph shows, struck by the increase in the levels of American debt and the increasingly erratic policy.
Confidence in America decreases, reaches an increase in the levels of American debt and increasingly erratic policy. (International Monetary Fund))
China, formerly the world’s largest owner of treasure bills and American bonds, has sold the debt of the American government and rather built its gold store.
This allowed us to the Treasury managers who aroused us at night. Less demand for the Debt of the United States government is going through higher interest rates directly. Indeed, investors would require higher yields or interest rates to buy the higher risk bonds they hold.
With the invoice of interest on its debt of 37 billions of US dollars already exceeding $ 1 billion of dollars per year, it is something that the United States can badly deal.
Can America hear the flow of money?
The American secretary of the Treasury, Scott Bessent, prays for him to find the answer.
Like foreign governments and their central banks fell from US dollars and US government debt, Stablecoins can simply fill the violation.
The Secretary in the United States of the Treasury, Scott Bessent, hopes that the demand for Stablecoin for the Debt of the United States government will reduce loan costs. (ABC News: Bradley McLennan))
Continuous demand for the debt of the American government is vital for the future of America, which the boss of Bessent, Donald Trump, did not understand.
The American president thinks that the rest of the world is “tearing us apart” because the United States manages a trade deficit. The real problem is that Americans spend more than they save.
And the only way to finance is to ensure that there is a high demand for the debt of the American government.
Bessent hopes that the request for Stablecoin for the Debt of the United States will reduce loan costs. He has a serious heft supporting him on this subject. Citigroup and Standard Chartered investment banks both believe that the use of stablescoin will increase exponentially in the coming years.
Even large retail chains and American banks have started to explore stablecoins to reduce excessive costs billed by credit card companies.
It looks like an easy solution for the secretary of the Treasury. But as a newspaper economist underlinesIf the money simply went from one set of domestic buyers to another, pain relief will be short -lived.
He also underlines that, if the world becomes hung on the use of the stable reserve, the foreign demand to support the US dollar Stablecoins will also increase the demand for US dollars.
This, in turn, will push the higher US dollar, giving the Americans more purchasing power for their imported goods.
It would undermine all Trump’s efforts to priced his way to a trade surplus.
Some winners
For all the optimism that blockchain technology can finally provide useful applications, questions remain.
While Circle – another stablecoin and a smaller rival to attach – is audited independently, its greatest competitor is not.
It does not reveal where its reserves are kept or exactly what they understand and especially if it holds volatile assets such as Bitcoin which can undermine its ability to balance its passives.
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To date, he has resisted some all-powerful crypto storms. But if it weakens, it seriously damaged the credibility of the emerging industry and would derail any solution, as short term, that Scott Bessent could reserve the demand for American public debt.
The change of feeling towards cryptocurrencies, especially since Donald Trump reached power earlier this year, was simply spectacular.
Bitcoin is negotiated on records and most passionate observers expect it continues to increase.
It is estimated that the president raised $ 320 million among sales of one of his pieces even, while a foreign government heritage fund has invested $ 2 billion in another. A third sold at least $ 550 million in tokens.
But not everyone is a winner in the cryptographic sphere.
Those who have invested in $ Trump, the president’s coin and his wife’s medal $ Melania, have undergone massive losses from the tip of the day of the inauguration.
