TLDR
- Former House Speaker Paul Ryan argues that embracing dollar-backed stablecoins can help the U.S. avoid a debt crisis and maintain the dollar’s dominance in international markets.
- Ryan states that the growing demand for stablecoins, which are backed by U.S. Treasuries, would create a consistent source of demand for U.S. debt.
- He believes this would reduce the risk of a failed debt auction, which could undermine the U.S. government’s credibility and lead to severe market turmoil.
- Ryan cites China’s efforts to promote the digital yuan in emerging markets as a threat to the dollar’s global influence, and sees stablecoins as a way for the U.S. to counter this.
- He calls for bipartisan support in Congress to establish a clear regulatory framework for stablecoins, which he believes would “dramatically expand the use of digital dollars at a critical time.”
Former House Speaker Paul Ryan has sparked a debate in the cryptocurrency world by suggesting that dollar-backed stablecoins could play a crucial role in addressing the United States’ growing debt crisis and maintaining the dollar’s dominance on the global stage.
In a recent opinion piece published in the Wall Street Journal, Ryan argued that the increasing demand for stablecoins, which are cryptocurrencies pegged to the U.S. dollar, could provide a much-needed boost to the demand for U.S. Treasuries.
This, in turn, could help alleviate the risk of a failed debt auction, which Ryan warns would “roil markets and severely undermine U.S. credibility.”
Ryan, who served as the 54th Speaker of the U.S. House of Representatives from 2015 to 2019, emphasized the urgency of finding new ways to make the dollar more attractive, especially as countries like China and Saudi Arabia are exploring alternatives to settle payments outside the dollar-led financial system.
Very high-profile piece in the WSJ by Paul Ryan. A must-read if you haven't yet. Add it to the ever-growing file of "not priced in." https://t.co/8UaVp8fJOJ
— MacroScope (@MacroScope17) June 16, 2024
One of the main concerns raised by Ryan is China’s growing influence in the digital currency realm.
He pointed out that China has been integrating its digital yuan into various investment platforms in several emerging markets, potentially challenging the U.S. dollar’s longstanding status as the global reserve currency.
To counter this threat, Ryan suggested that embracing dollar-backed stablecoins could be a viable solution.
He argued that stablecoins issued on public, permissionless blockchains represent “the deeply American values of freedom and openness,” in contrast to China’s centralized digital financial infrastructure.
Ryan’s opinion piece has garnered both praise and criticism from various industry leaders and experts.
Emin Gün Sirer, the CEO of Ava Labs, praised stablecoins as “one of the best things to come out of crypto” and their potential to maintain the dollar’s global dominance.
Adam Gladstein, the chief strategy officer at the Human Rights Foundation, expressed concerns that increased stablecoin use could perpetuate and reinforce the traditional financial system that Bitcoin was designed to subvert and replace.
As the debate continues, Ryan has called for a bipartisan effort in Congress to establish a sound and predictable regulatory framework for stablecoins in the U.S. He believes that such a framework could “dramatically expand the use of digital dollars at a critical time.”
It is worth noting that Ryan currently serves as a policy council member at Paradigm, a cryptocurrency-focused venture capital firm, which may influence his perspective on the matter.
