Stablecoin: The New Petrodollar? How Trump Repeats Nixon's Experience in the Digital Financial Sector
Contrary to expectations, there is no Bitcoin in this document, but a special role of stable currencies in the strategy of the state is indicated.
During the election campaign, Donald Trump repeatedly mentioned Bitcoin in his speeches. Now he is back in the White House and has actually signed an executive order entirely dedicated to digital finance.
Contrary to expectations, there is no Bitcoin in this document, but a special role of stable currencies in the state strategy is indicated.
January Executive Orders
US President Donald Trump's team managed to convince a significant part of the community that the new White House administration would create a favourable climate for the development of cryptocurrencies worldwide. It is expected that businesses will receive a new impetus for development and that the industry will penetrate deeper into the financial market, which will ultimately lead market participants to prosperity and success.
Maybe this will be the case. However, until that happens, it is worth taking a closer look at what exactly Trump's team is focusing on and what his vision for cryptocurrencies is. The US president's long-awaited executive order was published on 23 January on the White House website under the title "Strengthening U.S. Leadership in Digital Financial Technologies."
The second paragraph of the document is dedicated to "promoting and protecting the sovereignty of the US dollar, including through actions to promote globally the development and growth of regulated dollar-backed stablecoins."
This provision is supported by a ban on all types of development and promotion of central bank digital currencies (CBDCs). Together, these two paragraphs indicate an intention to open a green corridor for private stablecoins whose issuers purchase US government bonds.
The remainder of the executive order does not contain clear guidance on other cryptocurrencies, including Bitcoin. Although digital gold was undoubtedly the focus of every legislative initiative during the campaign, it was not highlighted in the final document.
The Nixon Experience
To understand the logic of Trump's team, we should recall 1971, when US President Richard Nixon abolished the dollar's link to gold. The American leader took these measures because of the growing budget deficit and colossal spending on the Vietnam War.
In spite of the 'Nixon shock', the dollar was maintained as the global currency for international payments. And the rejection of the gold standard allowed the government to print virtually unlimited amounts of money.
Brent Crude Oil
The abolition of the standard exacerbated a serious crisis in the energy market. In 1973, it was provoked by the Arab states, which imposed an embargo on oil supplies to countries supporting Israel in the Yom Kippur War. By 1974, the prices of 'black oil' had risen about sevenfold, and by the end of the decade by twentyfold.
As early as 1973, the term 'petrodollar' appeared, denoting the exceptional importance of the American currency in the energy trade: it was discovered that the whole world needed oil, and they began to sell it only in dollars. Thus the US had room to print an unlimited number of debt bonds, for which there would be a queue anyway.
The situation got out of hand during the coronavirus pandemic. Since then, the US national debt has steadily increased by several trillion dollars per year. At the same time, there has been a decline in demand for US government bonds due to the exit of some market participants to alternative solutions. The US government is facing economic problems reminiscent of 1971.
Cryptocurrency Market Perspectives
Following the historical examples, we are approaching another major crisis, accompanied by widespread price increases for globally important assets and a return of the dollar as the main unit of transit between them.
Maybe everything will work out for the best and we will see a fairer financial system. But for now, only an attempt to create a new cycle of prosperity in debt relations is evident.
Strangely, cryptocurrencies have become a central element in the development of these ideas. Public debt is still at the centre of the economy, and the distributed nature of the blockchain allows this trend to be fully realised.
Sign up for Spaziocrypto®
The community for blockchain and cryptocurrency enthusiasts.
DeepSeek, the fruit of Chinese artificial intelligence development, has sent shockwaves through the artificial intelligence and cryptocurrency market, creating a grey area for Nvidia and cryptocurrency miners' stocks.
During the election campaign, Donald Trump repeatedly mentioned Bitcoin in his speeches. Now he is back in the White House and has actually signed an executive order entirely dedicated to digital finance.
Contrary to expectations, there is no Bitcoin in this document, but a special role of stable currencies in the state strategy is indicated.
January Executive Orders
US President Donald Trump's team managed to convince a significant part of the community that the new White House administration would create a favourable climate for the development of cryptocurrencies worldwide. It is expected that businesses will receive a new impetus for development and that the industry will penetrate deeper into the financial market, which will ultimately lead market participants to prosperity and success.
Maybe this will be the case. However, until that happens, it is worth taking a closer look at what exactly Trump's team is focusing on and what his vision for cryptocurrencies is. The US president's long-awaited executive order was published on 23 January on the White House website under the title "Strengthening U.S. Leadership in Digital Financial Technologies."
The second paragraph of the document is dedicated to "promoting and protecting the sovereignty of the US dollar, including through actions to promote globally the development and growth of regulated dollar-backed stablecoins."
This provision is supported by a ban on all types of development and promotion of central bank digital currencies (CBDCs). Together, these two paragraphs indicate an intention to open a green corridor for private stablecoins whose issuers purchase US government bonds.
The remainder of the executive order does not contain clear guidance on other cryptocurrencies, including Bitcoin. Although digital gold was undoubtedly the focus of every legislative initiative during the campaign, it was not highlighted in the final document.
The Nixon Experience
To understand the logic of Trump's team, we should recall 1971, when US President Richard Nixon abolished the dollar's link to gold. The American leader took these measures because of the growing budget deficit and colossal spending on the Vietnam War.
In spite of the 'Nixon shock', the dollar was maintained as the global currency for international payments. And the rejection of the gold standard allowed the government to print virtually unlimited amounts of money.
The abolition of the standard exacerbated a serious crisis in the energy market. In 1973, it was provoked by the Arab states, which imposed an embargo on oil supplies to countries supporting Israel in the Yom Kippur War. By 1974, the prices of 'black oil' had risen about sevenfold, and by the end of the decade by twentyfold.
As early as 1973, the term 'petrodollar' appeared, denoting the exceptional importance of the American currency in the energy trade: it was discovered that the whole world needed oil, and they began to sell it only in dollars. Thus the US had room to print an unlimited number of debt bonds, for which there would be a queue anyway.
The situation got out of hand during the coronavirus pandemic. Since then, the US national debt has steadily increased by several trillion dollars per year. At the same time, there has been a decline in demand for US government bonds due to the exit of some market participants to alternative solutions. The US government is facing economic problems reminiscent of 1971.
Cryptocurrency Market Perspectives
Following the historical examples, we are approaching another major crisis, accompanied by widespread price increases for globally important assets and a return of the dollar as the main unit of transit between them.
Maybe everything will work out for the best and we will see a fairer financial system. But for now, only an attempt to create a new cycle of prosperity in debt relations is evident.
Strangely, cryptocurrencies have become a central element in the development of these ideas. Public debt is still at the centre of the economy, and the distributed nature of the blockchain allows this trend to be fully realised.
Sign up for Spaziocrypto®
The community for blockchain and cryptocurrency enthusiasts.
No spam. Unsubscribe anytime.
Read Next
Trump Launches Truth.Fi: New Boost to Cryptocurrencies
Donald Trump enters the fintech sector with Truth.Fi, a platform that will invest up to $250 million in cryptocurrencies, DeFi and ETFs.
DeepSeek Revolutionizes the Market: Impacts on Nvidia, AI and Crypto Miner
DeepSeek, the fruit of Chinese artificial intelligence development, has sent shockwaves through the artificial intelligence and cryptocurrency market, creating a grey area for Nvidia and cryptocurrency miners' stocks.
Wallet Growth and Mini-App Developer Earnings on TON in 2024: Full Report
TON reports on the growth of portfolios and earnings of mini-app developers.
Bitcoin: Long-Term Holders Return to Accumulation - Glassnode and CryptoQuant Forecasts
After a sharp sell-off at $100,000, the number of Bitcoins held by long-term investors started to grow. Similar changes were recorded by Glassnode.