Scott Melker discusses why stablecoins enable the US dollar (DX-Y.NYB) to operate digitally and the advantages they offer users in countries with high inflation or capital controls.
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The Federal Reserve and the New York Fed recently devoted an entire conference to stable coins, digital payments and the international role of the dollar.
The Fed’s published summary was striking.
Several participants argued that stable coin growth is more likely to reinforce the dollar’s global use than erode it.
These tokens are creating new channels through which people can access, hold and transfer dollar denominated value.
That is why Washington’s posture towards stable coins changed so dramatically.
American policy makers mostly discussed crypto as a collection of risks, speculation, fraud, money laundering, sanctions, evasion and threats to financial stability.
Those risks are real.
But policy makers eventually noticed that the dominant stable coins were exporting dollars and buying American government debt.
Suddenly, crypto looked less like a rebellion against the dollar and more like an unpaid global sales force for it.
The Genius Act made that realization official.
The law created a federal framework for payment stable coins with licensing, supervision, redemption rules, reserve requirements and restrictions on what issuers can hold.
Treasury is still writing the implementing rules and the framework is expected to take effect in January 2027.
The political sales pitch was never merely that stable coins would make payments faster.
The White House explicitly argued that regulated dollar back stable coins would reinforce the dollar’s role in international finance and create more demand for US debt.
That is the second half of this story.
When a fiat back stable coin issuer mints one new dollar token, it does so after receiving a dollar through an approved customer customer or intermediary.
