• Christopher Waller, one of the Fed’s seven board members, said that so far the impact of the crypto industry on the dollar actually appears to be helping.
• As long as stablecoins are tied to the dollar, as 99% of stablecoins are currently, they will strengthen the dollar’s global strength.

Stablecoins are pegged to the dollar

Cryptocurrency critics often warn that digital currencies could destabilize the US dollar, but US Federal Reserve Board member Christopher Waller said: As decentralized finance (DeFi) becomes more popular, he argued that stablecoins’ dependence on the dollar could actually strengthen the dollar.

At an event held in the Bahamas on the 15th, Waller said, “People often speculate that crypto assets like Bitcoin will replace the US dollar as the world’s reserve currency.” , points out that most DeFi transactions use stablecoins, and 99% of their market capitalization is tied to the value of the dollar. “Therefore, increased trading in the DeFi industry is likely to simply strengthen the dollar’s ​​dominant role.”

Claims that the dollar’s status has declined are “empty”

Waller, who was appointed to the board by then-President Donald Trump in 2020, said there could be a monetary policy threat if people transition from using the dollar to using digital currencies in the future. I acknowledged that sexuality still exists. But on Monday, he argued that repeated rhetoric about the dollar’s declining status as the world’s reserve currency is hollow.

“Recent developments that some fear may threaten that position have actually strengthened it, at least so far,” Waller said.

The stablecoin sector, dominated by Tether (USDT) and USD Coin (USDC), is at the heart of crypto trading, serving as stable assets used to trade more volatile tokens. There is. And some predict that these viable digital assets could increase dramatically in the coming years, reaching trillions of dollars.

While the strength of the dollar is essential to the American economy and its foreign policy interests, many crypto enthusiasts believe that less control by such government-based currencies is a good thing.

｜Translation and editing: Rinan Hayashi
｜Image: Shutterstock
｜Original text: US Federal Reserve Gov. Waller Says DeFi Could Boost Dollar’s Global Strength