President Donald Trump executed an executive order to introduce dollar-backed stablecoins into the US financial system, thus advancing digital asset adoption.
The executive order favors dominant stablecoin companies Tether and Circle because they control 90 percent of the supply.
Push for Stablecoin regulations
The executive directive launched the development of a regulatory framework for stablecoins through its required six-month working group. A team of federal agencies headed by the Treasury Department and comprising Justice Department representatives and members from the Securities Exchange Commission and the Commodity Futures Trading Commission will establish frameworks enabling stablecoin progress. The Trump administration considers stablecoins as potential tools to protect the dollar’s international worth, strengthening American monetary authority.
The executive order established restrictions that prevent progress toward creating a federal money digital currency (CBDC). The administration’s primary focus is total dollar-backing of stablecoins because it seeks to foster their development into today’s equivalent global payment system that delivers financial access to all.
Industry backing and growing adoption
The stablecoin issuers Tether and Circle have constantly pushed for more explicit regulations for stablecoins to appear. As Tether’s chief executive Paolo Ardoino emphasized, stablecoins backed by dollars have found widespread adoption because they create a demand for debt in the U.S. and function as digital money for a global user base. Developing nations have seen stablecoins becoming a popular payment tool for remittances because they represent convenient monetary alternatives for their financial needs.
Concerns over risks and future oversight
Research finds positive outcomes for stablecoins, but financial stability faces multiple potential risks. Stablecoins has faced criticisms about appropriate oversight because of previous criminal activity investigations that targeted USDT. The Commodity Futures Trading Commission received a $41 million settlement from Tether, which centered around false representations of its assets. Brunella Rosa from Rosa and Roubini Associates, alongside another analyst, warns that insufficient regulation will trigger another crypto-market crash.
According to its proponents, the executive order presents corporations with a potential route to better-understanding crypto regulations. Resistance to cross-jurisdictional USD-stablecoin growth could decrease as Vincent Chok from First Digital sees potential in the widespread adoption of new USD-backed stablecoins among various countries.