In a proposal Writing in the Wall Street Journal, former House Speaker Paul Ryan argued for a new fiscal strategy that integrates cryptocurrency, particularly dollar-backed stablecoins, into the U.S. economic framework to counter the looming threat of a national debt crisis. Ryan, a prominent figure who led the House of Representatives until 2019, emphasizes the urgency of adopting stablecoins to avoid a catastrophic failure in the upcoming debt auction, which he says could undermine the U.S. global credibility and precipitate a major financial downturn.
Here’s how crypto can save the United States
Currently a member of the Policy Council at Paradigm, a venture capital firm focused on crypto innovations, Ryan brings a unique perspective that bridges traditional financial mechanisms with emerging digital solutions. In his opinion piece, he lays out a comprehensive vision for leveraging stablecoins to improve the liquidity and attractiveness of U.S. government debt globally.
Ryan argues that stablecoins, which are cryptocurrencies designed to maintain a stable value by being pegged to fiat currencies like the US dollar, could significantly bolster demand for American public debt. He suggests that these digital assets could outperform traditional foreign investors in Treasury securities, such as Hong Kong and Saudi Arabia, by providing a more stable and reliable mechanism for purchasing U.S. debt.
“Dollar-backed stablecoins not only provide a way to maintain the dominance of the US dollar as the international reserve currency, but also act as a crucial instrument to finance the US deficit without compromising long-term economic stability,” explains Ryan. His proposal emphasizes the dual advantages of crypto stablecoins: facilitate effective debt management and strengthen the international position of the dollar.
Ryan’s call for a “robust and predictable regulatory framework for stablecoins” aims to foster an environment in which these digital assets can thrive in a secure and predictable manner. He criticizes the current lack of comprehensive regulations, which he sees as a significant barrier to the adoption and growth of stablecoins in traditional financial operations.
It expands on the potential economic implications of integrating stablecoin cryptocurrencies into the U.S. financial system, including mitigating risks associated with fiscal imbalances and reducing reliance on foreign debt holders. In doing so, Ryan posits that stablecoins could serve as a buffer against economic shocks, such as those experienced during market contractions and crises of confidence in the dollar.
In the broader geopolitical arena, Ryan identifies the strategic importance of maintaining dollar supremacy in the face of growing challenges from global competitors like China. He points out that China is actively seeking to improve its international economic stature, positioning itself as a formidable rival in the global financial system.
“By integrating stablecoins into our financial arsenal, we not only guarantee our financial autonomy, but we also counter other countries’ efforts to erode the global influence of the dollar,” Ryan asserts. He emphasizes that proactive financial innovation, such as the adoption of stablecoins, is essential to maintaining U.S. economic dominance and preventing possible political and economic unrest.
Notably, Tether, the issuer of USDT, is already one of the largest holders of US Treasuries. As of March 31, its financial situation records showed holdings of $91 billion in US Treasuries, both direct and indirect, as well as $5.4 billion in Bitcoin. These securities rank Tether as the 19th largest holder of US Treasuries in the world, located between South Korea and Germany.
At press time, BTC was trading at $65,688.
Featured image from The Hill, chart from TradingView.com