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Cryptocurrencies Could Avoid Debt Crisis, Says Former US House Speaker
In a proposal Published in the Wall Street Journal, former House Speaker Paul Ryan has advocated for a new fiscal strategy that integrates cryptocurrencies, particularly dollar-backed stablecoins, into the U.S. economic framework to counter the looming threat of a debt crisis national. Ryan, a prominent figure who led the House of Representatives until 2019, highlights the urgency of adopting stablecoins to avoid a catastrophic failure in the next debt auction, which he believes could undermine US global credibility and cause a severe financial recession.
Here’s how cryptocurrencies can save the United States
Currently serving on the Policy Council for Paradigm, a venture capital firm focused on crypto innovations, Ryan offers a unique perspective bridging traditional financial mechanisms with emerging digital solutions. In his opinion piece, he articulates a global vision for leveraging stablecoins to increase the liquidity and attractiveness of US government debt on a global scale.
Ryan argues that stablecoins, which are cryptocurrencies designed to maintain a stable value by being pegged to fiat currencies such as the US dollar, could significantly boost demand for American public debt. According to him, these digital assets could outperform traditional foreign investors in Treasury securities, such as Hong Kong and Saudi Arabia, providing a more stable and reliable mechanism for purchasing US debt.
“Dollar-backed stablecoins not only provide a way to maintain the dominance of the US dollar as an international reserve currency, but also serve as a crucial tool for financing the US deficit without compromising long-term economic stability,” explains Ryan. His proposal emphasizes dualism advantages of crypto stablecoins: Facilitate effective debt management and strengthen the international position of the dollar.
Ryan’s call for a “robust and predictable regulatory framework for stablecoins” aims to foster an environment where these digital assets can thrive in a safe and predictable manner. He criticizes the current lack of comprehensive regulations, which he sees as a significant barrier to the adoption and growth of stablecoins in mainstream financial operations.
Elaborates on the potential economic implications of integrating crypto stablecoins into the US financial system, including mitigating risks associated with fiscal imbalances and reducing dependence on foreign debt holders. In doing so, Ryan speculates that stablecoins could serve as a buffer against economic shocks, such as those experienced during market downturns and crises of confidence in the dollar.
In the broader geopolitical arena, Ryan identifies the strategic importance of maintaining the dollar’s supremacy in the face of growing challenges posed by global competitors such as China. He points out that China has aggressively pursued improvements to its international economic stature, positioning itself as a formidable rival in the global financial system.
“By integrating stablecoins into our financial arsenal, we not only secure our own financial autonomy, but also counter other nations’ efforts to erode the dollar’s global influence,” Ryan says. He emphasizes that proactive financial innovation, such as the adoption of stablecoins, is critical to sustaining US economic dominance and preventing potential political and economic unrest.
Notably, Tether, the issuer of USDT, is already one of the largest holders of US Treasuries. As of March 31, it is financial records showed holdings of $91 billion in U.S. Treasury bonds, both direct and indirect, along with $5.4 billion in Bitcoin. These holdings ranked Tether as the 19th largest global holder of U.S. Treasuries, located between South Korea and Germany.
At the time of writing, BTC was trading at $65,688.
BTC price drops below $65,000, daily chart | Source: BTCUSD on TradingView.com
Featured image from The Hill, chart from TradingView.com