Stablecoins support the dollar but pose risks

The article discusses the Janus Law enacted last July, which regulates stablecoins pegged to the US dollar and grants banks and financial institutions the right to issue them with federal approval. The law aims to strengthen the global position of the dollar by supporting stablecoins backed by assets such as Treasury bills, thereby increasing demand for government debt and reducing yields, which could lead to lower interest rates in the United States. However, experts warn that the widespread adoption of these currencies could complicate the financial system, weaken the effectiveness of American sanctions, and make money laundering more difficult due to the possibility of trading with anonymous identities. There are also concerns that stablecoins could lose their stability—especially if their value suddenly drops—posing risks to the financial system. Although the law maintains full support for asset-backed stablecoins, unbacked currencies like Tether may face greater risks, particularly amid declining trust in American leadership and institutions. The future of the dollar and its level of dominance now depend on the success of this regulatory framework and the stability of the stablecoins linked to it.

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