US Government Plans to Promote Dollar-Backed Stablecoins Globally

The United States government is crafting a comprehensive strategy to promote dollar-backed stablecoins in international markets. This initiative is seen as a means to ensure that as the world transitions to digital currencies, the US dollar remains the dominant currency.

As of now, over 98% of the global stablecoin supply is pegged to the US dollar. The US aims to make this dominance permanent, using it as a tool to channel foreign capital into US Treasuries.

Regulatory Framework and Legislative Support

The groundwork for this initiative began with an executive order signed by President Trump on January 23, 2025, which emphasized the importance of dollar-backed stablecoins for maintaining US dollar sovereignty. This was followed by the enactment of the GENIUS Act on July 18, 2025, which established a federal regulatory framework for payment stablecoins, mandating issuers to maintain a 1:1 backing with high-quality liquid assets.

This requirement creates a structural demand for US government debt, as Treasury bills are the most viable means for issuers to meet their liquid-asset obligations. Currently, stablecoin issuers hold tens of billions of dollars in US Treasuries.

Involvement of Financial Institutions

In September 2026, a consortium of 21 global banks announced plans to launch a new dollar stablecoin in early 2027, marking a significant shift in how traditional financial institutions view stablecoins.

The Treasury Department is in the process of developing rules to implement the GENIUS Act, with a complete regulatory framework expected to emerge by 2028, coinciding with the banking consortium's planned launch.

Market Implications

For emerging markets, dollar stablecoins are increasingly being used as savings vehicles and payment systems, particularly in regions with unstable local currencies. For the US government, each dollar held in stablecoin reserves translates to increased demand for Treasuries, which is crucial given the government's ongoing borrowing needs.

However, there are risks associated with this concentration. A financial system reliant on dollar stablecoins could create vulnerabilities, as a run on a major stablecoin issuer might necessitate rapid liquidation of Treasury holdings. While the GENIUS Act's reserve requirements aim to mitigate these risks, the framework has yet to be tested under market stress.