Trump Advocates for Cryptocurrency Legislation to Boost Dollar

TLDR

• Bessent predicts stablecoin market will reach $2 trillion soon.
• Trump aims to pass stablecoin legislation by August.
• Senate has passed a stablecoin bill, advancing regulatory efforts.

U.S. Treasury Secretary Scott Bessent claims that former President Donald Trump’s push for cryptocurrency legislation could help maintain the U.S. dollar’s global dominance. Bessent made these remarks during recent discussions centered on the role of stablecoins in the national financial strategy. Both Bessent and Trump aim to integrate digital assets into the U.S. economy, with a focus on stable, dollar-backed cryptocurrencies.

In a statement posted to X (formerly Twitter), Bessent noted that stablecoins might reinforce dollar supremacy. He emphasized their potential to become significant buyers of U.S. Treasurys. See his post here.

Trump’s Legislative Agenda for Crypto

Trump has expressed a desire to pass a bill on stablecoins by August, reflecting the administration’s focus on bolstering crypto-related legislation. His executive order mandates the Commerce and Treasury departments to devise strategies for acquiring cryptocurrencies like Bitcoin as part of federal reserves.

The administration’s eagerness to incorporate stablecoins into economic policy is viewed by several financial experts as a move that could enhance the dollar’s international authority. Current legislative efforts are aimed at positioning the U.S. as a leader in crypto adoption.

New Projections for the Stablecoin Market

Bessent predicts a significant expansion of the stablecoin market. He estimates a $2 trillion valuation within three years, up from the current $240 billion. This anticipated growth indicates a substantial increase in capital flow, with banking institutions like JPMorgan Chase and Bank of America poised to enter the market.

This growth projection aligns with recent policy developments that favor stablecoins over central bank digital currencies (CBDCs). The Trump administration is publicly supporting privately-issued, regulated stablecoins over a Federal Reserve-run CBDC model.

Impact on Major Cryptocurrencies and Blockchain

The policy direction is expected to affect U.S. dollar-pegged stablecoins like USDT and USDC directly. Bitcoin is also under consideration due to the proposed federal reserve strategy, while Ethereum is likely to experience indirect effects as it supports stablecoin infrastructure.

Other assets like governance tokens of major DeFi protocols (e.g., MakerDAO, Aave) and associated Layer 1 and Layer 2 blockchains may see changes. The administration’s favorable stance towards digital currencies is expected to increase engagement within DeFi and other crypto-related sectors.

Regulatory and Institutional Involvement

Legislative efforts have progressed, with the Senate passing a stablecoin bill and the House advancing its version. The administration prefers working with the private sector to innovate using stablecoins, thus avoiding a state-run digital currency model that could compete with commercial banks.

Participation from notable figures and institutions in policymaking discussions demonstrates institutional interest in this evolving landscape. This involvement is likely to drive further regulatory clarity and encourage industry-wide growth, aligning policy with financial innovation goals.