Can stablecoins be able to prevent de-dollarization?

[zasad@]

You know that PayPal has already launched its own stablecoin.
The company Circle and Tether uses a dollar stablecoin, which is used not only by American companies. If the McHenry bill is passed in the US, will it strengthen the dollar as the world's reserve currency?

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[_act_]

the McHenry bill is passed in the US, will it strengthen the dollar as the world's reserve currency?

The USD stable coins are backed and pegged mostly with fiat USD, that means as more people are buying the stable coins, the company that are offering the stable coins will buy more USD fiat. People across the world can buy the stable coin easily on exchanges and this is increasing the strength of USD as a foreign reserve.

[Despairo]

PayPal USD is designed to contribute to the opportunity stablecoins offer for payments and is 100% backed by U.S. dollar deposits, short-term U.S Treasuries and similar cash equivalents. PayPal USD is redeemable 1:1 for U.S. dollars and is issued by Paxos Trust Company. 

According to their article, their stable coin is 100% backed by U.S. dollar, so how can PayPal stable coin is preventing de-dollarization? if the stable coin really backed by U.S. dollar, it's actually still supporting USD but in different form.

I think almost all stable coin is using US dollar, treasury, etc as underlying value, only few stable coin is using other fiat due to low interest.

[icalical]

PayPal USD is designed to contribute to the opportunity stablecoins offer for payments and is 100% backed by U.S. dollar deposits, short-term U.S Treasuries and similar cash equivalents. PayPal USD is redeemable 1:1 for U.S. dollars and is issued by Paxos Trust Company. 

According to their article, their stable coin is 100% backed by U.S. dollar, so how can PayPal stable coin is preventing de-dollarization? if the stable coin really backed by U.S. dollar, it's actually still supporting USD but in different form.

I think almost all stable coin is using US dollar, treasury, etc as underlying value, only few stable coin is using other fiat due to low interest.

Yes, PayPal is supporting USD and I think that's what OP mean by Preventing de-dollarization so USD will still be dominating, or I am wrong about the meaning of preventing de-dollarization.

It's true that PayPal will support USD, but that is assuming if PayPal stable coin project is succeed, and also we already have USDT and many other stable coin, but de-dollarization is still happening.

[kryptqnick]

The dollar is already very strong as the world's reserve currency. The so-called de-dollarization is greatly overestimated, and wild allegations of moving away from the USD usually aren't serious. There's a neat Wikipedia table that summarizes the IMF data on foreign reserves. As of 2022, the USD accounts for more than 58%, with the next currency (EUR) having 20%, and the next being shy of 6% (Japanese yen). So the USD dominance is clearly still very string, and it's not even falling if you zoom out, as it was lower in 1990, 1985, and around the same in 1980, for example.
What I'm trying to say is that the USD doesn't need anything to get stronger and prevent de-dollarization, and there's data that supports that claim. As for stablecoins, I don't think they increase the trust in the USD, to be honest, but I don't think they do much harm to it internationally either.

[Fiatless]

You know that PayPal has already launched its own stablecoin.
The company Circle and Tether uses a dollar stablecoin, which is used not only by American companies. If the McHenry bill is passed in the US, will it strengthen the dollar as the world's reserve currency?

Currently, the dollar is the safest fiat currency to back stablecoin because it is more stable compared to other fiat currencies. Paypal has an estimated 429 million users worldwide and PayPal USD (PYUSD) will be available for them to adopt. But this doesn't mean that it will make the dollar stronger because other factors contribute to the value of a currency. With this news, Alipay might come up with its stablecoin backed by the Chinese Yen.

The McHenry bill will be the first comprehensive law on crypto regulations, we are expecting to see the effect of its provisions. But there is not much difference between Central bank digital currencies (CBDCs) and stablecoins. The only difference is that CBDCs are issued by the government while stablecoins are handled by private firms. They are all fiat clothed in crypto.

[Huppercase]

You know that PayPal has already launched its own stablecoin.
The company Circle and Tether uses a dollar stablecoin, which is used not only by American companies. If the McHenry bill is passed in the US, will it strengthen the dollar as the world's reserve currency?

Dollar will remain dollar and this wouldn't change anything, the adoption especially the foreign reserves will maintain their policy, what's the use of stablecoins when the fiat will do the same job, just one is digital and the other is physical. I think the central bank digital currency will do the opposite adoption for people who value dollar than stablecoins that always have dishonesty in financial audit.

Perhaps this will strengthen the PayPal company transaction, nothing new under this new polarized stablecoin. Only PayPal will earn from the loans they will lend out, interest rate from borrowers and fee from transaction because people will be willing to use PYUSD since people can get the chance to redeem it for physical USD, more transactions, more fees and more revenue for the company, and when people don't feel safe with USDT and USDC, they will rush to PYUSD especially during depegging of the value we normally have in FUD times.

[Sim_card]

Nothing changes if Paypal coin is backed up by USD. The US dollar has being be most used currency for back up by stable coins because it has the high value among all fiat currency. Fiat dollar is the same with US stable coins and it is made like that,so that you can have access to use the US dollar physically or digitally, when making transactions. De-dollarization is happening but it isn't showing a much impact on dollar since no other fiat currency in the world has the same value as dollar. Also we should know that other country fiat currency is depreciating due to   inflation. No government can stop inflation since it is part of the economy.

[hyudien]

PayPal USD is designed to contribute to the opportunity stablecoins offer for payments and is 100% backed by U.S. dollar deposits, short-term U.S Treasuries and similar cash equivalents. PayPal USD is redeemable 1:1 for U.S. dollars and is issued by Paxos Trust Company. 

According to their article, their stable coin is 100% backed by U.S. dollar, so how can PayPal stable coin is preventing de-dollarization? if the stable coin really backed by U.S. dollar, it's actually still supporting USD but in different form.

I think almost all stable coin is using US dollar, treasury, etc as underlying value, only few stable coin is using other fiat due to low interest.

This is the bottom line, that way it ultimately boils down to the US Dollar. So that the stigma remains the same as the unstoppable US Dollar threat. De Dollarization aims to break the dominance of the US Dollar, PayPal adopted a stablecoin backed by the US dollar. so I did not find a point of difference in solving global economic problems. I think current stablecoin still haven't prevented de-dollarization. Or is the solution really not a stablecoin? The Threat of De Dollarization continues to challenge the resilience of the US Dollar.

[EarnOnVictor]

The company Circle and Tether uses a dollar stablecoin, which is used not only by American companies. If the McHenry bill is passed in the US, will it strengthen the dollar as the world's reserve currency?

The arrangement of stablecoins is more economically inclined than other cryptocurrencies, they are backed by assets, which could be gold, currency and others. And since most stablecoins are backed by the USD, then it's a better strength for the USD because they are actually acting like it.

I've always said that those who are trying to change the world balance would fail, we should enjoy the somewhat freedom and stability we have now because those countries trying to enforce de-dollarization will become more evil than good over time, they have the tendency to rule maximally.

However, my resolve remains that they will only try but will always fail as the USD is the only currency with reference to the past history that can hold that status. Not even the Chinese Yuan that is often been manipulated through pegging and is less popular in the FX market.

[pooya87]

You mean centralized shittokens created and controlled by centralized companies? I think it is obvious that it can not do anything let alone prevent dedollarisation! Such companies can be easily shut down not to mention that they are practically releasing dollar just in digital form.

You are also forgetting that the countries are decreasing their dependence on dollar (aka dedollarisation) because they want to reduce the effects that dollar (in any form it has) on their economy and country as a whole.
For example they don't want to have their funds frozen in off-shore accounts or services like SWIFT just because they didn't fully obey what US had ordered them to do. So whether it is SWIFT or iFinex (releasing tether) or Circle or PayPal or whatever is not going to change that.

[khiholangkang]

You know that PayPal has already launched its own stablecoin.
The company Circle and Tether uses a dollar stablecoin, which is used not only by American companies. If the McHenry bill is passed in the US, will it strengthen the dollar as the world's reserve currency?

I don't think so, because Dedollarization is more precisely related to transactions between countries that do not use the dollar as a transaction tool, so it will return to the country that is conducting the transaction, whether to continue to use the dollar as a transaction tool or use its own currency.
This includes cooperation, today Paypal may issue its stable coin which is pegged to the dollar, but that is not an indicator that the dollar will be used, if the transacters are China and Indonesia, for example, China buys goods from Indonesia using rupiah as well as Indonesia using yuan when you want to buy goods from China.
But maybe retail trading, preferring stablecoins to make transactions. CMIIW

[Marvell1]

the McHenry bill is passed in the US, will it strengthen the dollar as the world's reserve currency?

The USD stable coins are backed and pegged mostly with fiat USD, that means as more people are buying the stable coins, the company that are offering the stable coins will buy more USD fiat. People across the world can buy the stable coin easily on exchanges and this is increasing the strength of USD as a foreign reserve.

Although the process of de-dollarization is happening, it is not able to weaken USD dominance overnight. USD is still the world's reserve currency, so it is very normal for stable coins to remain pegged to USD. But if de-dollarization happens faster and the USD loses its position and value, then stablecoins will soon be pegged to another currency as well. Like CZ came up with this idea when the stable coin BUSD was attacked by the government. He also shared his view that he will find ways to reduce dependence on the USD and create stablecoins pegged to currencies such as the Yuan or the JPY...

Currency wars are much bigger and it is outside the influence of the cryptocurrency market, so the stablecoins market will not affect the currency wars of countries.

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He also shared his view that he will find ways to reduce dependence on the USD and create stablecoins pegged to currencies such as the Yuan or the JPY...

I remember when CZ said he will find other ways. But what other ways has he found now? If he talked about using Yuan and Yen, he is only deceiving himself. Those backed stable coins are backed by their respective fiat, like USDT, USDC, BUSD, TUSD all backed by United States dollar, while coins like Euro Tether backup by Euro which is the second strongest currency in the world. No on can use the fiat of another country to back the stable coin that is not backed by the fiat. Instead, using assets like gold may be better but which would be of small percentage to fiat.

[so98nn]

That is really funny because the last time any of us checked, the dollar was already dominating the world and it will keep doing so. The Dollar to X-currency conversion and use of dollar reserves for every country will never stop. Literally every country is always looking forward to having their dollar reserves at the top because that is what is needed to buy foreign assets or foreign imports.  Definitely, the Dollar is already backed up with an amazing strategy and high-value transactions. The dollar was threatened many times and they also thought that GBP would be the next currency we will be considering as the king of all, but it never happened even when sterling ruled the world already back in the time. If there is anything they need to do is to maintain their repo as they did until now and keep up with the lesser interest and strategy to minimize the inflation in the country. The dollar kingdom will keep up always.

[mu_enrico]

Is it (the stablecoins) created and used to prevent de-dollarization though? I don't think so. Paypal is a sunset platform anyway with so many new payment apps coming out (and having way cheaper fees) and Circle + Tether isn't big enough for the mentioned purpose. It's so small and basically does not affect the "de-dollarization" if the term is real, and not wishful thinking. As long as goods and services are happily using USD for international trade, I don't think de-dollarization will happen. There must be some incentive to use the non-USD currency for International Trade to make it work. Anyway, this move is just to make Paypal relevant again since many people now switching to other payment apps, me using Wise for example because it's cheaper and faster.

[Faisal2202]

You know that PayPal has already launched its own stablecoin.
The company Circle and Tether uses a dollar stablecoin, which is used not only by American companies. If the McHenry bill is passed in the US, will it strengthen the dollar as the world's reserve currency?

Are you referring to this bill

This bill establishes a regulatory framework for payment stablecoins (digital assets which an issuer must redeem for a fixed monetary value).

Only permitted issuers are allowed to issue a payment stablecoin for use by U.S. persons. Permitted issuers must be a subsidiary of an insured depository institution, a federal-qualified nonbank payment stablecoin issuer, or a state-qualified payment stablecoin issuer. In general, permitted issuers must be regulated by the appropriate federal regulator, however, state-qualified issuers must be regulated by an appropriate state regulator.

Permitted issuers must maintain reserves backing the stablecoin on a one-to-one basis using assets as outlined by the bill, such as U.S. coins and currency or other assets regulators determine appropriate. Permitted issuers must also publicly disclose their redemption policy, establish redemption procedures, and publish on their website every month the details of the issuer's reserves.

The bill sets forth requirements for (1) the rehypothecation, or reusing, of such reserves; (2) providing custodial or safekeeping services for stablecoins or private keys; and (3) supervisory, examination, and enforcement authority over non-state qualified issuers.

In addition, the bill places a two-year moratorium on new endogenously collateralized stablecoins (i.e., stablecoins that rely on the value of another digital asset created or maintained by the same originator to maintain the fixed price).

Under the bill, permitted payment stablecoins are not considered securities under securities law.

Because if yes, then i am amazed to hear that companies could actually use stable coin because the bill is still in progress. I am just amazed because i thought if a company like USDT wants to live in USA then they must have 1 to 1 real USD to back them up but this bill in progress tell another story. Well, i am just asking here.

My views on this bill are, if it got approved then definitely it will bring good impact to US dollar because as the first member's comment says, pegged stable coin do need one to one US dollar back there to back there stable coin so in the process the demand for US Dollar will increase.

[bittraffic]

Can stablecoins be able to prevent de-dollarization?

Maybe so. But I think the basis of the depolarization is the international trade between countries and the PetroDollar. If let's say, Saudi Arabia which is the largest oil producer will start PetroYuan, then it's the start. To my knowledge, it hasn't been happening but they were very friendly with China since the time Joe threatened to make them Pariah.

The BRICS members however are already agreeing about this de-dollarization except India which opposed it since Modi wants Ruppee to be the one than Yuan.

[darkangel11]

The way I see it, stable coins are just a way to add more unneeded risk to your financial operations. They are pegged to fiat, so they are bound to inflate and lose value just like fiat and if the fiat money goes into hyperinflation, what will happen to the stable coin? So by using things like Tether, you are not immune to what the FED does with your money. They still have control. On top of that, the company that issues the coin has control over your money and you depend on their position on the market. If that company gets in trouble or decides to scam you, you lose everything. How is that better from holding cash, fiat money in the bank, or cash?

The only way to protect yourself is to hold a decntralized cryptocurrency like bitcoin, or something that is universally recognized to have value, like gold.

[mindrust]

As long as people borrow and lend USD, USD will get stronger. When I say “USD will get stronger”, I don’t mean that USD will have a better purchasing power. I mean that USD will have a better user adoption in the future. Tbh I don’t see USD going away any time soon. The world is not ready for a revolution like that. We will keep using USD till we cannot anymore… we won’t choose some other currency magically.

When the USD becomes unusable, only then we will look for an alternative and people will probably decide to go with a crypto currency and bitcoin obviously is the most sensible choice here. But we still have a long way to go there.