14/11/2025
🏠𝙋𝙧𝙤𝙥𝙚𝙧𝙩𝙮 𝙑𝙨 🪙𝘿𝙞𝙜𝙞𝙩𝙖𝙡 𝘼𝙨𝙨𝙚𝙩
Lately, one of the discussion topics which many investors love to revolve around is linked to digital assets /digital gold. In spite of their popularity and speed of worldwide adoption, S.P.G still advocates owning hard assets like physical gold and properties – especially those offered within Singapore. Singapore houses are priced, transacted, and pegged exclusively in highly stable Singapore Dollars. Greater financial prudence must be exercised globally moving forward, due to ongoing global economic uncertainties and latent imbalances. All the more, having savvy investment is getting much more crucial in our world's new financial order.
In July 2025, after signing the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) into law, President Trump stated: "This could be, perhaps, the greatest revolution in financial technology since the birth of the Internet itself".
Can the ingenious solution for the world's largest debt problems be simply resolved by wrapping enormous Treasury Debt little by little with Digital coins and selling them as Assets globally?? Did stablecoin adoption engineer USD Index past 2 months steady growth? Will gold price be artificially suppressed longer going forward?
For those who are not genius enough to grasp what’s in it for you, below is the simplest analogy. When Company A mints/makes/buys mainly product B and sells to customer C, customer C will likely/mainly get product B. This certainly applies to product- “Debts” as well. Fair enough, you get what you ask for - Debt & Inflation. Just like the milk chocolate products shown in the picture below, they certainly looked more appealing with the outer gold wrapper added. But can they be used to buy or replace 1 oz Canadian gold maple leaf bullion coin? There are good reasons why US banks do not allow the use of stablecoin in the purchase of physical gold coins.
The stablecoin issuers for both USD Coin (USDC) and Tether (USDT) actively 𝐛𝐮𝐲 𝐚𝐧𝐝 𝐬𝐞𝐥𝐥 𝐔.𝐒. 𝐓𝐫𝐞𝐚𝐬𝐮𝐫𝐢𝐞𝐬 as part of their reserve management strategy. This practice is a primary source of revenue for these companies. Issuers like Circle (for USDC) and Tether invest the cash they receive for newly minted stablecoins into short-term, low-risk, interest-bearing assets like U.S. Treasuries. This strategy helps ensure the stablecoin can maintain its 1:1 peg with the U.S. dollar, and backed by U.S. Treasury bills. Stablecoin adoption could increase the demand for U.S. dollars and U.S. Treasury bills. When global investors and users purchase these stablecoins, it creates additional demand for U.S. currency and government debt. JPMorgan analysts projected that this could generate trillions of dollars in additional demand for the USD.
Traditionally, when the US government issues treasury bonds, investors or foreign nations buy them and receive yield in return. If demand weakens, the Fed buys the bonds using newly printed money which increases the money supply, and devalues the USD over time. The inflationary impact is felt predominantly by Americans at first before spreading to the world. The sn*******ng interest payments on the U.S. national debt are a significant and growing fiscal challenge, often described as a major long-term concern.
Their saving grace is - If one holds a stablecoin, one holds a slice of tokenized non-yield bearing US treasuries; holding US debts & effectively purchased IOU yet with zero return. The key point to remember is that the yield is pocketed by the issuers, and not offered to the public. This allows the US to finance itself while the global user base holds non-yielding tokens.
By allowing stablecoin issuers to hold treasuries as reserves, the Genius Act creates a new private market for US debt. Stablecoins like USDT & USDC are globally circulating digital dollars used by many people worldwide. As stablecoin supply grows, these purchases could put downward pressure on treasury yields and add volatility to short-term funding markets Moreover, widespread foreign adoption could reinforce the reach of the USD, effectively spreading US monetary influence around the globe further and faster. The nominal debt issued yesterday has become a smaller percentage of the expanded money supply for tomorrow – diluting its real weight. The effect is subtle but far-reaching. Instead of selling debt only to banks or foreign nations, the US can now sell it into the reserves of private tokens.
Stablecoin issuers have become the new money printer. These private companies take on the role of issuing digital dollars backed by Treasuries. With these stablecoins circulating globally, the inflationary effects are exported. The dilution of value doesn’t slam exclusively into American households, it gets absorbed worldwide by anyone who uses these tokens directly or indirectly. It means the US can now geniusly inflate its debt away without triggering hyperinflation on its own borders, while the world would be using a more efficient form of bad money. Subsequently as other flat currencies around the world continue to be weakened by trading their own currencies for “debts”, they will flee to what seems to be the best of the worst options. And their currencies will likely depreciate further & faster under such vicious cycles. This is particularly applicable in emerging markets where local currencies may be unstable or access to traditional banking is limited, and also in countries where they are experiencing currency crisis; enabling global users to hold and transact in a stable, dollar-linked asset.
By printing endless dollars and allowing stablecoin issuers to monetize treasuries, the US effectively dilutes its debt they owe tomorrow. The nominal debt does not shrink, but as the money supply expands, that debt becomes a smaller fraction of global liquidity. Let us use a soup analogy; it is like adding more water to a salty soup. The amount of salt remains the same but the taste gets weaker. The same phenomenal debt is true. With inflated money supply, debt proportion becomes much smaller. The US can now effectively inflate away its debt, not just domestically, but globally. By bypassing the FED, the SWIFT Network, and other Central Banks globally. It can spread the effects of dollar debasement across the entire world, all the way to each individual user of stablecoin globally. Stablecoin adoption can increase demand for US debt and combat Dedollarization. Stablecoin issuers hold large reserves of U.S. Treasury bills to back their stablecoins. The rapid growth of the stablecoin market increases demand for this U.S. government debt, which in turn lowers borrowing costs for the U.S. government. New purchases by foreign individuals and corporations strengthen the dollar. By making the dollar more readily available and efficient for use in the crypto ecosystem and beyond, stablecoins help cement the dollar's status as the default currency for global digital commerce & dominance.
Despite the reinforcing effect, stablecoins present new regulatory challenges and risks, such as potential financial instability if reserves are not managed transparently or if "bank run" dynamics occur, when a large group of investors redeem their holdings at the same time. In 2022, algorithm stablecoin TerraUSD collapsed after losing its US$1peg. And in 2023, a bank run occurred when Silicon Valley Bank saw billions of deposits withdrawn. A run on stablecoins could spill over to other markets and destabilise traditional banking.
Many people actually believe they are holding something stable as the name “so-called” suggested. But just when they think the bait and switch couldn’t possibly get any worse, there might be a darker twist to this entire charade. As public blockchains have privacy, it can bypass integrity safeguards. At any point, Uncle Sam can flip the switch with a stroke of a pen and the press of a keyboard and add CBDC mechanism into the system – where a global currency already circulating in every corner of the world, instantly will become programmable money, when every transaction could be tracked, every wallet could be frozen, every token could be diluted, burned or seized at their government’s discretion. This is taking CBDC to the next level, and yet the world wouldn’t even have a choice. By holding stablecoin, they are already inside the system without their consent, knowledge and without any way out. Unfortunately, this is no conspiracy theory, but is already happening now and yet surprisingly many are blind to it. Stablecoins are also hackable because they rely on complex systems; including centralized issuers and decentralized smart contracts - that all have vulnerabilities which malicious actors can exploit. Stablecoins themselves are digital assets, but their underlying mechanisms for maintaining their value (peg) and storing reserves create multiple security risks too.
The current market size for stablecoins is approximately $280 billion to over $314 billion, with the most recent estimates hovering around $300 billion. This market has seen significant growth, driven by increased adoption for payments, remittances, and trading, and is dominated by U.S. dollar-pegged stablecoins.
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