It does not need an expert to understand that the global financial order is heading for a reset. Global debt levels are at record highs, real growth is hard to come by, and aging populations and increasing inequality are coupled with incessant conflicts. Concurrently, developments in AI and robotics are looming over the future of job markets.

It cannot be said lightheartedly, despite all its perils, that chaos may ensue in the collapse of the global financial system which was most fundamentally agreed upon in the wake of World War II in Bretton Woods, resulting in an indisputable hegemony of the United States. The Gold Standard on which the Bretton Woods System was founded collapsed in 1971 despite all the convertibility limitations, such as individuals not having access to convert dollars into gold. The aftermath has been a well-documented and perhaps the most dramatic monetary experience in the known history of humanity, keeping scarce monetary assets away from the focal point of attention for decades.

One prominent phenomenon that has been accompanying this everlasting monetary expansion has been the breakthroughs in the software industry, which has gradually permeated into the lives of people all across the world. Today, we live in a hyper-globalized world in which a chip company in Taiwan has taken the center stage of global geopolitics, while telecommunication infrastructures across the world rely on Chinese procurement, and a handful of American tech companies constitute the majority of value held in stock markets. As software penetrates into all aspects of our daily lives, becoming ever more indispensable for humanity with each passing day, we are ever more dependent on the delicate balance of geopolitics that controls the entire supply chain of the digital infrastructure. These events have led to the conjuring of intriguing theories on the overtaking of capitalism by Big Tech, which rather resembles feudalism.

If all of this sounds depressing, that is because it most certainly is. Nonetheless, this piece aims to offer some reflections before winding up, by introducing a plot twist that reveals a silver lining. But unfortunately, first, it gets even more depressing.

The Perils Of Currency Digitalization

Money is certainly what moves the world as the means of exchange for scarcities. Since digitalization continues as an unstoppable vector of transformation, money is not left spared from this trend. Unsurprisingly, it follows the trend closely. Prior to digital currencies becoming a hot topic over the recent years, money has gone through a long transformation with the implementation of advancements in computer science into the banking system.

The earliest and most major development can be singled out as the introduction of the SWIFT system, allowing a global network of settlements. Consequently, SWIFT was released in the same year (1973) when the fixed exchange rate regime of Bretton Woods was officially dismantled. Although heavily gate-kept, it is undeniable that SWIFT has been a major success in enabling an extremely safe mechanism that allows monetary transactions across the world. Meanwhile, starting from the 1960s, the fast development of payment processing networks was revolutionary for consumer transactions, leading to a gradual decline in cash payments.

As the decline of cash is inevitably happening, the digital money landscape that will replace paper money will be the underlying technological base of the rising global monetary order.

As the decline of cash is inevitably happening, the digital money landscape that will replace paper money will be the underlying technological base of the rising global monetary order. It is imperative to underscore that the decline of cash is not happening at the same pace in each country, and when the process does not occur naturally, governments can step in to introduce policies that defy reason. The bizarre removal of the two banknotes with the highest circulation in India, Nigeria’s disastrous push for going cashless and introducing a CDBC, and criminalization of large amounts of cash usage in Europe are some of the recent news that come to mind. Turkey is another case where paper money became worthless as the highest-denominated currency (200 Turkish liras) went from almost $200 to less than $5 in about 20 years, leading to it comprising 85% of the existing cash in circulation (kudos to CBRT for not removing this data from public access), while no plan for introducing larger denominations has been made public. Therefore, looking at such different policy decisions, it seems clear that policymakers may have different official objectives for enforcing currency digitalization. However, the results are similar, with a globally simultaneous effort on eliminating cash by governments (and elites), and where failure meets such policies, endless suffering for common people.

Nevertheless, in addition to the government-enforced policies, a dark horse in the currency digitalization landscape has undoubtedly been the rise of stablecoins, as they present real potential for mass adoption due to their truly global nature, independent of the fragmented banking infrastructure.

Nevertheless, in addition to the government-enforced policies, a dark horse in the currency digitalization landscape has undoubtedly been the rise of stablecoins, as they present real potential for mass adoption due to their truly global nature, independent of the fragmented banking infrastructure. As of October 2025, monthly transaction volumes on stablecoins as reached $1.4 trillion, matching Visa and Mastercard network volumes. Therefore, understanding the potential political implications is becoming ever more critical.

Stablecoins: Made in USA

The word stablecoins has become synonymous due to the practical reality of the stablecoin market being constituted by almost entirely USD-pegged stablecoins. Readers who are deeply curious about different types of stablecoins and their critical properties can read this (somewhat outdated) report for a crash course. Meanwhile, to understand why there is so much demand for USD-pegged stablecoins, a more fundamental approach to what properties constitute “moneyness” would be helpful.

Defining money is harder than any other task in the field of economics. But for the purpose of convenience, the political definition of money will be pointed at the influential economist Jacques Melitz’s definition as “an instrument of power“. Meanwhile, the functional definition of money will stick to the Aristotelian tradition: medium of exchange, unit of account, and store of value. However, the influential emphasis of William Stanley Jevons focuses on the most critical attributes of money as “Medium of Exchange” being the primary one, while “Measure of Value” comes secondary.

Based on these reference points for political and functional definitions of money, the most common money in circulation today is undoubtedly the US dollar. Despite lots of discussion on potential challengers, there is no real evidence to claim that the demand for USDs is weakening. It is hard to guess when this status quo might change, but an educated guess would find it implausible to happen in a quick fashion. Thus, it may be sarcastic to say, but the number one export product of the United States may indeed be the Dollar, and stablecoins are strengthening the supremacy of the US dollar rather than weakening it.

Thus, it may be sarcastic to say, but the number one export product of the United States may indeed be the Dollar, and stablecoins are strengthening the supremacy of the US dollar rather than weakening it.

On a related note, last summer, US Treasury Secretary Bessent openly acknowledged this phenomenon by saying, “Crypto is not a threat to the dollar. In fact, stablecoins can reinforce dollar supremacy.” With the US officials opening Pandora’s box, what was once crypto quickly became a key political economy issue that is publicly disputed by the global power elites. Soon after Bessent’s comments, Anton Kobyakov, one of Putin’s advisors, made a public comment that “The U.S. has devised a crypto scheme to erase its massive debt at the world’s expense.” [emphasis added]. Then it becomes necessary to address the elephant in the room: How are all these digital currencies poured into a single basket called crypto?

Why is it all not crypto?

Although it is impossible to know how much semantics matter to politicians, Bessent and Kobyakov probably referred to crypto as an overarching concept that encompasses all cryptocurrencies. However, this is clearly not true. A cryptographically scarce asset that reaches network effects like Bitcoin is not the same as a token with no real function and sold to insiders for pump-and-dump schemes, which is what most of the crypto market has ever been. Meanwhile, a stablecoin is essentially a digital form of a currency (and almost certainly USD). Therefore, it seems unwise to bring all digital currencies under the term crypto, which has practically become a derogatory term due to the industry being riddled with scams, extreme volatility, disastrous bankruptcies, and catastrophic security breaches.

However, to investigate what Kobyakov was referring to as a crypto scheme in his statement, one needs to look at several (loosely related) critical developments in the realm of on-chain finance, which is the preferred term to be used instead of crypto for the rest of this article.

First, it cannot be ignored that the demand from speculators who gamble in the crypto casino drives the volume of stablecoins higher, as traders need an asset pair to trade tokens against each other. Thanks to stablecoins fulfilling this purpose as the unit of account within the on-chain rails (both on centralized and decentralized exchanges), people were able to switch to and maintain USD positions at will without moving money in and out of their bank accounts. Thus, it is an undisputable fact that stablecoins enabled a horde of traders to remain within the on-chain finance ecosystem at their convenience.

Thus, it is an undisputable fact that stablecoins enabled a horde of traders to remain within the on-chain finance ecosystem at their convenience.

Another critical issue, which is completely overlooked in the Decentralized Finance (DeFi) industry, is about USDC, a centralized stablecoin, highly compliant with US regulations. For familiar readers, USDC needs no introduction. It is the second-largest stablecoin, and unlike the largest stablecoin, USDT, it is issued by a US-based corporation, Circle. USDC is the top trading pair in DeFi. What makes this odd is that DeFi protocols often do not allow US IP addresses to access their front ends, citing a lack of ability to enforce KYC/AML on users. To prevent Americans from accessing DeFi applications, many protocols voluntarily resort to extreme policies, such as blocking access to such websites even when using VPNs, a restrictive policy that has traditionally been considered fundamentally authoritarian. Therefore, the fact that USDC has been the dominant underlying trading pair for an industry that does not even allow Americans to be onboarded as users remains a key contradiction that has been normalized, although USDT would probably not serve the industry any better in terms of decentralization.

Speaking of USDT, another highly critical development in the stablecoin space has been the emergence of USDT as a main use case for payments, making its issuer, Tether, the most profitable company in the world, as the company is disallowed from paying interest to clients while enjoying the privilege of being ranked among the top countries with US treasury ownership. Ultimately, Tether is the living proof that stablecoin issuers can become an ample source of demand for the parabolically surmounting debt of the United States.

Lastly, Tether’s rise to dominance took place in parallel with Bitcoin’s reasserting dominance in the cryptocurrency market cap over recent years. For anyone paying close attention, these events should not be surprising. Bitcoin has been heavily endorsed by American miners and institutional investors, while USDT payments have exploded in jurisdictions with high demand for foreign exchange due to various reasons, such as the relative price stability of stablecoins. Hence, the working patterns of some well-known theoretical discussions (particularly for economists and economic historians) have started to become apparent.

The Endgame Of Currency Hegemony

The outcome of these developments provides a unique setting where two opposing monetary adoption theories occur simultaneously: Gresham’s Law and Thiers’ Law. Gresham’s Law is a theory that suggests bad money drives out good money from circulation, bad money being the one with higher inflation. Using this analogy, and assuming fiat currencies are dying due to endless currency devaluation, many (and more importantly, the rich) may choose to hoard Bitcoin due to its hard-coded scarcity while using USD as a means of payment, as it triumphs Bitcoin as a Unit of Account. Needless to say, since the US is the home of USD, it would make sense to commence the mass adoption from there, which is exactly what is happening in practice through institutional demand and mining capacity.

On the other hand, Thier’s Law suggests that good money drives out bad money from circulation when legal tender laws are absent or ignored. This phenomenon can apply to jurisdictions where citizens have lost hope of price stability and governments seem unable to achieve it. Users would then show stronger demand for stablecoins over the local currency, especially if merchants chose to accept stablecoins. The circumstances could be exacerbated if users/consumers somehow start to adopt on-chain finance applications that pay interest, which is already possible.

In the end, the outcome of the rise of stablecoins is likely to bolster the hegemony of the dollar, and the increasing global demand may help the United States to socialize parts of its debt. Meanwhile, early adopters of Bitcoin have an asymmetric advantage during this transition. Hence, Kobyakov’s hypothesis does not seem implausible. However, the success of such a plan is linked to another highly contentious political economy phenomenon: Dollarization.

Scholars have long argued on the pros and cons of dollarization. From the perspective of a government, official dollarization means a de facto end to its monetary sovereignty, leading to outcomes such as loss of the option to devalue currency in the face of a major shock event, loss of ability to act as lender of last resort, and effectively transferring seigniorage rights to the United States. Meanwhile, empirical evidence suggests that high inflation can be tackled.

Nevertheless, dollarization has never happened in a G-20-level economy. Long-standing discussions for Argentina have not materialized, showing the difficulty of making such quasi-irreversible policy decisions. However, stablecoins introduce a new dollarization vector that is hard for governments to curb. If all that is necessary to have a dollar account is a smartphone and internet access, then more trouble might be on the way for high-inflation territories. A smart policy decision for such jurisdictions would be to crack down on ‘crypto payments’ early on, such as what Turkey did, by banning cryptocurrency payments right before the beginning of an inflationary spiral that reached borderline hyperinflation.

However, even if larger economies were open to full dollarization, the conundrum that needs to be addressed is that the basis of dollarization would be controlled by two companies that are either directly under US jurisdiction or effectively complying with the US authorities whenever required (respectively, Circle and Tether). This would undoubtedly be a worse deal from the perspective of the dollarized nations compared to the amount of economic leverage lost, say, when joining the SWIFT network.

The Silver Lining: True Decentralization

I would like to finish this piece by offering peace of my mind by focusing on decentralized stablecoin issuance, a topic that comprises a good part of my doctoral studies. Decentralized currency issuance is a key use case in DeFi, which relates to the business model of decentralized borrowing protocols.

Decentralized borrowing is a true innovation in banking, which disintermediates modern banks by implementing automated bankruptcy protections, thus removing the overhead of risk assessment for debtors (and also the necessity of most regulatory oversight). While banks are the main venues of money creation in the contemporary economy, DeFi borrowing serves the same purpose, however, with a major twist. All debt positions are overcollateralized under normal circumstances, and each debt position is liquidated once the collateral’s nominal value denominated in dollars does not meet the required risk standards, which is always at least 100%. While the main caveat of fractional reserve banking is capital inefficiency, there is no reason why such an application should not have a product-market fit. Curious readers can start with this brief introduction on this specific group of stablecoins

This product-market fit may emerge in jurisdictions with increasing degrees of dollarization, as the key benefit of decentralized stablecoin issuance is censorship resistance.

This product-market fit may emerge in jurisdictions with increasing degrees of dollarization, as the key benefit of decentralized stablecoin issuance is censorship resistance. I have worked on a framework that evaluates how true decentralization works in technical and regulatory scopes. According to this framework, true decentralization comes not only from censorship resistance but also from true financial inclusion by eliminating KYC requirements for users. Ultimately, these attributes underlie the true innovation, one that allows a crypto Eurodollar market that cannot be censored by the US or the local authorities.

Needless to say, the United States should be expected to vehemently oppose such systems if they were to scale.

Needless to say, the United States should be expected to vehemently oppose such systems if they were to scale. However, if they could somehow scale, radical changes in the global political landscape could emerge thanks to the provision of safe access to censorship-resistant stablecoins, empowering political dissidents who are hurt by predatory policies of their governments (monetary or otherwise), as well as rendering sanctions policies obsolete by enabling alternative rails for US dollars, which international trade heavily depends on. Therefore, the availability of such DeFi protocol implementations is becoming ever more critical as the phenomenon of dollarization is entering a new era, thanks to the disruptive developments in the currency digitalization landscape, despite not getting the attention it deserves.