Jeremy Allaire, the CEO of stablecoin issuer Circle Pay has urged the US to get serious about considering the legalisation of stablecoins. Stablecoins can digitise the US dollar to overcome what Allaire described as, an ongoing “de-dollarisation” in the market. The chief of the crypto firm behind the USDC stablecoin stated on Wednesday at the ongoing Consensus 2023 conference that the US banking crisis has triggered a need for the country to consider the legalisation of stablecoins.
“We have a very active de-dollarisation taking place. You’re having very significant reactions to the US risks in the US banking system, risks with the US government itself, a geopolitical imposition on many parts of the world [and] the desire for alternative payment systems all around the world,” Allaire reportedly stated at the conference.
When other countries in the world, begin to reduce their dependency on the US dollar as a reserve currency or a medium of exchange, that process is called ‘de-dollarisation’. The US dollar has reigned over the global economy for decades. Consecutive interest rate hikes in the US, however, have caused many international central banks also to spike their interest rates and save their fiat currency against depreciation.
The US financial authorities resorted to multiple interest rate hikes this year, in order to balance its economy against already rising inflation. In addition, the US financial system also faced a shock when three banks collapsed within a week’s time in March due to mismanagement of funds, leading to a financial crunch, several months after the downfall of crypto exchange FTX.
Global financial giants like Morgan Stanley and JP Morgan Asset Management have previously predicted a fall in the strength of the dollar amid the US Federal Reserve exercising additional controls.
According to Circle Pay’s CEO, the US could lay out guidelines around the permissible use-cases of US-backed stablecoins, that will help boost investment in the dollar by the international Web3 community. He has suggested the Federal Reserve to introduce a digital dollar into its existing financial system and ‘capitalise on the high demand’ soon.
“The demand for digital dollars like USDC is highly global. We see that demand all around the world — we see it in emerging markets, we see it in markets where people want to hold a digital dollar versus their local banking system […] as an efficient medium of exchange for various types of international transactions,” Allaire reportedly added.
Zimbabwe, in a bid to keep its economy stable in the wake of the fluctuating status of the dollar, is reportedly exploring the launch of a gold-backed digital asset. The reserve bank of Zimbabwe is reportedly looking to launch the purported digital token backed by gold, as legal tender in the country to fight against inflation. Between 2009 and 2019, the country had adopted the US dollar as its national currency. However, the move did not give the country’s economy the desired push, prompting a switch back to the Zimbabwean dollar.
