Over 98% of stablecoins are dollar backed. That’s good for the U.S.—until it’s not

Stablecoins are now more than 98% dollar-pegged, and speakers at the Milken Institute argued that wider adoption could further entrench U.S. dollar dominance in global payments and savings. Barry Silbert said this may strengthen U.S. geopolitical leverage, but also reduce fiscal discipline by sustaining overseas dollar demand and enabling continued loose monetary policy. The article also highlights rising interest from Visa and Stripe, while warning that CBDCs such as China’s digital yuan are unlikely to rival dollar-backed stablecoins globally.

Analysis

The strategic implication is not that stablecoins “help crypto,” but that they extend dollar distribution without requiring U.S. banking rails. That is bullish for any firm monetizing payments, custody, and tokenized settlement, but the second-order winner is the dollar itself: more offshore working capital will sit in USD equivalents, increasing structural demand for short-duration Treasuries and reducing FX conversion friction for cross-border commerce. The market is still underestimating how quickly this can become a wholesale payment layer rather than a retail crypto product.

For incumbents, the key distinction is whether they own the on-ramp, the compliance stack, or just the transport layer. Networks and processors that can sit between fiat and tokenized balances gain transaction volume and float economics, while pure interchange businesses face pressure if stablecoins route around card rails for P2P and B2B payments. Over 12-36 months, the real displacement risk is in remittances, merchant settlement, and treasury operations for multinational SMEs, where fees and settlement times are most obviously impaired.

The macro wrinkle is that reserve-currency demand becoming more elastic cuts both ways: it supports dollar dominance, but it may also weaken the discipline normally imposed by external financing constraints. That creates a longer-dated bearish case for front-end fiscal credibility and a bullish case for assets linked to tokenization infrastructure, because regulatory acceptance tends to follow usage, not precede it. The contrarian point is that CBDCs are less of a direct competitive threat than a political response; the more likely outcome is a fragmented regime where private dollar stablecoins dominate internationally while governments tighten domestic rails.

The timing matters: the adoption curve can accelerate in months if a major platform or payment processor turns stablecoins into a default checkout option, but the macro effects on Treasury demand and fiscal behavior play out over years. Near term, the biggest catalyst is regulatory clarity in the U.S.; a permissive framework would unlock distribution and likely widen the gap versus CBDCs, while enforcement actions could delay adoption without eliminating the use case.

Key Decisions for Investors

• Long V into the next 6-12 months as a beneficiary of stablecoin distribution and tokenized settlement; use any pullback on regulatory headlines to build, with upside if card-adjacent rails capture issuance and compliance fee flow.
• Long COIN / short a basket of high-fee remittance and cross-border payment processors for a 6-18 month relative-value trade; the thesis is fee compression in legacy transfer rails as stablecoin settlement scales.
• Buy a basket of short-duration U.S. Treasury exposure or rate-sensitive proxies on dips as a hedge against structurally higher offshore USD demand; this is a medium-term macro hedge, not a tactical trade.
• Initiate a small optionality position in tokenization infrastructure beneficiaries via fintech/market-infrastructure names on any U.S. regulatory green light; the risk/reward improves materially if real-world asset tokenization moves from pilot to production.
• Avoid shorting dollar stablecoin adoption directly; if anything, fade outright CBDC enthusiasm outside China, as the more likely outcome is private stablecoins winning international fungibility while state alternatives remain domestically confined.