Stablecoins, cryptocurrencies pegged to the value of the US dollar, are among the most disruptive technologies to emerge from digital finance in the last decade. However, rumors have emerged that the US government may regulate them as securities. This stance is concerning as stablecoins have the potential to cement US financial hegemony for a generation.
Inflation-ravaged countries like Zimbabwe, Turkey, and Argentina are already turning to stablecoins to convert their native currencies into dollar-backed stablecoins. With a high rate of adoption in Latin America, stablecoins are acting as the hedge against inflation that Bitcoin was supposed to be.
Stablecoins bring millions of new participants into the dollar economy and offer the greatest opportunity for US dollar expansion since Bretton Woods. If properly regulated, they have the potential to become tools for projecting American economic power.
If the SEC classifies stablecoins as securities, it will present a tremendous hurdle to global adoption, and it will do so at a critical time for US dollar hegemony. With the organic growth of stablecoins worldwide, the SEC must regulate them in a way that protects consumers but also stimulates dollarization.