Bitcoin May Benefit from US Stablecoin Dominance Push

The US government's focus on maintaining the dollar's dominance through stablecoin adoption could have unintended advantages for Bitcoin. As regulators push for policies that strengthen the US financial system, Bitcoin may see increased adoption and investment, solidifying its position as a potential national reserve asset.

US Stablecoin Policies and Bitcoin’s Institutional Growth

During the White House Crypto Summit on March 7, US Treasury Secretary Scott Bessent reaffirmed the government's commitment to using stablecoins to reinforce the dollar’s global reserve currency status.

“We are going to put a lot of thought into the stablecoin regime, and as President Trump has directed, we are going to keep the US [dollar] the dominant reserve currency in the world,” Bessent stated.

Additionally, the Trump administration has vowed to end restrictive regulations on crypto, including reversing previous IRS guidance and other punitive measures.

This policy shift gained further significance when Trump signed an executive order establishing a Bitcoin reserve using cryptocurrency forfeited in criminal cases. While this move does not involve direct federal Bitcoin purchases, it reflects a notable shift in how the US government perceives Bitcoin’s role in the financial ecosystem.

Institutional Investment and Regulatory Clarity

The growing adoption of stablecoins and the push for clearer regulatory frameworks could lead to greater Bitcoin investment, according to Omri Hanover, general manager at the Gems Trade blockchain launchpad.

“If Trump’s policy strengthens US financial dominance, Europe’s reluctance and ‘wait-and-see’ approach could weaken its economic leverage,” Hanover told Cointelegraph.

“This divide creates two market realities: the US accelerates Bitcoin’s institutional adoption, drawing capital, while the EU prioritizes compliance, risking a capital shift to US markets.”

Currently, two significant bills—the Stablecoin Bill and the Market Structure Bill—are awaiting congressional approval. These legislative efforts aim to provide regulatory clarity, which could further boost institutional involvement in the crypto sector. However, Congress has yet to pass any related bills.

Growing Stablecoin Profits Could Fuel Bitcoin Investments

As stablecoin issuers generate increasing profits, a portion of their earnings could flow into Bitcoin, strengthening its position as a store of value.

Tether, the issuer of the world’s largest stablecoin, USDT, has already announced plans to allocate 15% of its net profits to Bitcoin. This strategy aims to diversify its asset reserves and capitalize on Bitcoin’s long-term growth potential.

Tether’s investment approach has already proven lucrative. In the first quarter of 2024, the company reported a record $4.5 billion profit. Approximately $1 billion came from operating profits linked to US Treasury holdings, while the remaining $3.52 billion stemmed from market gains on Bitcoin and gold holdings.

Currently, Tether’s Bitcoin wallet, identified by the “bc1q” address, holds over $6.8 billion worth of Bitcoin, making it the sixth-largest holder globally, according to BitInfoCharts data. In total, Tether’s Bitcoin holdings contributed $5 billion to its annual $13 billion profit in 2024, as reported by Cointelegraph.

Conclusion

As the US strengthens its stablecoin policies to maintain the dollar’s dominance, Bitcoin stands to benefit from increased adoption and investment. Regulatory clarity, institutional participation, and stablecoin issuer profits could further enhance Bitcoin’s role as a key financial asset. While the full impact of these policies remains to be seen, the evolving regulatory landscape signals a new era for Bitcoin in global finance.