Why New U.S. Crypto Rules Will Reverberate Globally
Stablecoin legislation set to pass next week will boost the use of crypto payments as well as the influence of the dollar.
The Takeaway
• New rules are expected to boost confidence in stablecoins
• Dollar-backed cryptocurrencies are already growing fast in countries with volatile currencies
• Stablecoins pegged to dollars will boost influence of U.S. currency globally
The most important cryptocurrency bill in history could become law next week, but its immediate effect on everyday Americans will be negligible. Instead, the biggest impact will occur overseas, where it will boost both crypto and the dollar in the global economy.
The law will bolster confidence in stablecoins, cryptocurrencies pegged to a traditional asset, generally the U.S. dollar. Individuals and businesses across the world—from Argentina to Turkey—have embraced stablecoins to deal with volatile currencies, avoid capital controls and make payments.
The rise of stablecoins, such as Tether’s USDT, the dominant token, and Circle’s USDC, pose risks to national financial systems because they bypass banks, are hard for regulators to control and increase the role of the dollar in overseas economies. Drug dealers and money launderers also use stablecoins to move cash, making it harder for governments to fight illicit activities.
“When the Trump government came into power, it gave legitimacy to stablecoins,” said Ife Johnson, co-founder and CEO of Juicyway, a Nigerian payments startup. Stablecoins have grown rapidly in countries with volatile currencies such as Nigeria; they give people easy access to dollars.
In Argentina, a nation that has suffered nearly every kind of financial crisis, stablecoins are increasingly popular. Micaela Scapino, a 24-year-old software engineer who lives in Cordoba, Argentina’s second-largest city, said she now keeps almost all of her savings in stablecoins.
“I feel really comfortable and safe having my money in currencies like this…not being worried about if my pesos are worth less this month,” Scapino said in a video chat from her home, a duplex with a backyard that she shares with her boyfriend. She now keeps little in her traditional bank account. “Less than 10,000 pesos,” she said.
She works remotely for a Chilean fintech company and is paid in stablecoins through Deel, a payroll startup that specializes in remote workers. She nearly tripled her salary when she took the job last year, in part because she’s effectively getting paid in dollars.
To pay rent for their three-bedroom house, she converts her stablecoins at the beginning of each month into 1.2 million pesos (about $950) using Belo, a local crypto app. Over the last weekend, she paid for two bottles of Coca-Cola and a bag of ice at a supermarket by scanning a QR code with the app, which instantly converted her Tether stablecoins into 12,400 pesos (roughly $10).
Stablecoin providers typically back the cryptocurrencies with short-term Treasurys and other safe, liquid dollar-based assets, linking them to the U.S. currency. One pitch for the bill in Congress is that it will increase demand for Treasurys at a time when the U.S. needs to sell a lot more of them to fund rising budget deficits.
“It’s a win-win-win for everyone involved: the private sector, the Treasury, consumers,” Treasury Secretary Scott Bessent said in a post on X last month, urging the passage of stablecoin legislation.
The bill is likely to be approved by the House next week, which it has dubbed Crypto Week in support of President Donald Trump’s pro-crypto policies. The measure has had bipartisan support in both chambers, in part because the crypto industry has become a big election donor, backing friendly candidates and attacking unfriendly ones.
Pinn Lawjindakul, a Lightspeed Venture Partners investor who focuses on Southeast Asia, said the U.S.’s pro-crypto pivot has boosted consumer confidence in stablecoins and spurred startups into the market. “There’s a huge pent-up need for U.S. dollars in emerging economies that constantly see their currency devalue,” she said. “There’s way stronger trust now in stablecoin technology.”
She is tracking stablecoin adoption in countries like Malaysia, the Philippines and Indonesia, which have had volatile currencies and have a large base of remote employees who often work for U.S. companies.
Consumers and businesses in emerging markets like these have long wanted to hold assets in dollars but have struggled with domestic regulations and difficulty getting the U.S. currency. Stablecoins avoid those problems. However, the shift to dollar-backed stablecoins could pose a threat to the weakest currencies and the financial systems of those countries.
“It’s more efficient to dollarize with stablecoins as opposed to physical cash,” said Nic Carter, founding partner at crypto venture firm Castle Island Ventures, who invests in stablecoin-related startups. “As we look forward to the next 10 years…I think you will see it happen at scale, and it will topple certain sovereign currencies.”
Bank for International Settlements, a Switzerland-based organization owned by the world’s central banks, has warned that stablecoins without regulation could pose a risk to financial stability and monetary sovereignty. Countries could face potentially destabilizing capital flows via stablecoins while also being tightly linked to the dollar’s performance, which is largely driven by the U.S. economy. The dollar is down about 10% this year against a basket of currencies, one of its worst years in decades.
Tether is by far the biggest winner in the global shift to stablecoins. It has about a 90% market share by volume in real-world payments, according to data from Artemis, a crypto analytics firm. Stablecoin payments volume globally jumped to $51 billion in 2024—a rise of over 75% in a year—and is on track to reach more than $72 billion this year, according to Artemis.
Tether’s Ambitious Plans
Stablecoins companies can throw off big profits. Last year, Tether, which has $159 billion in stablecoins outstanding, earned more than $13 billion in profits with little more than 100 employees. Companies like Tether make their money from interest earned on the assets that back their tokens. Unlike bank accounts or money market funds, stablecoins typically don’t pay interest to their holders.
At a private event Tether hosted in May for clients and partners at the JW Marriott Marquis Hotel in Dubai, CEO Paolo Ardoino outlined the company’s ambitious expansion plans. He listed 22 use cases for its stablecoin, including saving in dollars; fast, cheap remittances; hedging against inflation; and microloans.
For Tether, the push to diversify beyond crypto trading is critical: Its USDT stablecoins could be de-listed by exchanges in the U.S. if it can’t comply with auditing and reserve requirements under the new stablecoin legislation. Tether has said it plans to launch a separate stablecoin for the U.S. market, while growing USDT usage in the rest of the world.
Tether is using its vast profit to build up a portfolio of companies. It sees commodity trading—which often involves paying for multimillion-dollar cargoes of oil, metals and food to sellers in emerging markets—as the next leg of growth for its stablecoin. Commodities are typically priced in dollars. In March, Tether bought a majority stake in the New York Stock Exchange–listed agricultural giant Adecoagro, one of the biggest land owners in Argentina. That could lay the groundwork for Tether to get into providing financing and stablecoin payments in commodity trading.
But Tether has also been under criticism because drug dealers and terrorist organizations have used its stablecoin to move money. The company estimates it has more than 400 million users across the world, but for most of them it doesn’t verify identity since they don’t interact directly with it, instead buying the tokens on exchanges or from brokers. Tether says it collaborates with law enforcement agencies to freeze assets when needed.
Nigeria’s Juicyway has ridden the stablecoin boom, growing deposits to $64 million in June from $6 million a year earlier. It acts as an exchange, mostly for businesses needing dollars or naira, the Nigerian currency. It uses stablecoins to settle most of these transactions, a service provided by Stripe-owned Bridge, which helps companies convert dollars into stablecoins in order to transfer money faster than international bank wires.
Companies in markets like these are trying to influence regulations. Yellow Card, the largest stablecoin payment company in Africa, is providing input for a bill in Kenya, said CEO Chris Maurice.
“People are using this technology, and it’s not something that you can stop,” he said. “That’s one important thing for regulators to remember.”
