stable coins
By Maheen Hernandez
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Why BPI Fears Offshore Dollars. Right now, banks outside the U.S. can create dollar credit pretty much however they want.
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China and Europe Loom Large. BPI sees threats everywhere. China's digital yuan already pays interest to holders, which makes it…
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The Bitcoin Policy Institute dropped a plan Wednesday to make U.S. stablecoins the dominant force in global finance.
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BPI thinks regulated stablecoins can give Washington more control over dollar markets that currently sit offshore, outside American reach.
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The GENIUS Act already forced stablecoin issuers to hold full reserves in Treasury bills, Treasury repos, or insured deposits. Can't lend against them either.
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But the group didn't stop there. They laid out five specific moves to make U.S. stablecoins unbeatable in international markets.
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Second, push stablecoins as the go-to option for international trade settlements instead of Eurodollar deposits.
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Third, create a fee and reward system that lets stablecoins compete with interest-bearing options like Eurodollar deposits and China's digital yuan. The catch?
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BPI sees threats everywhere. China's digital yuan already pays interest to holders, which makes it appealing for international transactions.
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The institute thinks these developments chip away at U.S. control over global financial infrastructure. And they're not wrong to worry.
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BPI's fourth recommendation targets decentralized finance, or DeFi. The group wants restrictions to stop unregulated protocols from acting like offshore credit multipliers.
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The fifth point focuses on foreign currency sovereignty. BPI says the U.S. should support local monetary systems while pushing stablecoin adoption.
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The whole plan, according to BPI, won't require increasing sovereign debt or expanding the Federal Reserve's balance sheet. That's a big claim.
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BPI keeps hammering on the idea that stablecoins can replace Eurodollar deposits in international trade. Right now, those offshore deposits sit outside U.S.
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The fee and reward system BPI proposes is kind of clever. Since the GENIUS Act bans interest payments, stablecoin issuers can't compete directly with interest-bearing alternatives.
The Currency Analytics
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