At a recent CoinSpeech event, influential crypto commentator Lark Davis elaborated on the compelling argument first laid out by Paul Ryan on how cryptocurrency could potentially be the savior of the US dollar. You can watch the full Lark Davis video below.
Crypto’s Role in Stabilizing the US Economy
Lark Davis begins by addressing the traditional stance of Washington DC’s power brokers who have long portrayed crypto as a scam. As Hillary Clinton previously warned, crypto has “the potential for undermining currencies for undermining the role of the dollar as the reserve currency.”
The Debt Crisis and Treasury Auctions
Paul Ryan identifies America’s national debt and the risk of a failed treasury auction as critical issues. He explains that if US Treasury demand dries up, it could lead to a dire scenario: “The fat lady sings, all that kind of stuff,” and forecasts a spiral into economic downturn and hyperinflation.
The Stablecoin Strategy
In a surprising twist, Paul Ryan proposes using stablecoins as a solution. These digital assets, often backed by the US dollar or similar reserves, could boost the demand for US Treasuries. For example, Tether had “84% of $104 billion USDT backed by cash or cash equivalent,” most of which are US Treasury bills.
Ryan argues that supportive legislation for stablecoins could “extend the US global dominance of their dollar and their treasury markets potentially by decades.”
Impact on Global Markets and Crypto
Ryan’s proposal also capitalizes on the worldwide popularity of stablecoins. As Davis notes, stablecoin issuers could become “the fourth-largest holders of Uncle Sam’s debt in the world.” With potential easing of regulations, stablecoins could see even more demand globally, especially in countries experiencing economic instability.
Potential Pitfalls and Long-Term Concerns
Despite this optimistic outlook, Davis cautions that stablecoins are a temporary fix. “Stable coins are not going to save the US dollar from collapse in the long term; they’ll just extend things out buy them a few decades.” The ultimate survival of the dollar would depend on the US government’s fiscal responsibility—a distant hope according to Davis.
In the swirling debate over the future of global finance, Davis and Ryan offer a novel approach that merges the worlds of blockchain and traditional economics, promising a lifeline to an embattled US dollar.