US Aims to Regulate Stablecoins, Trump’s Crypto Czar Says

According to David Sacks, the crypto czar appointed by Donald Trump himself, the Trump administration intends to regulate and enable stablecoin innovation in America. Speaking on CNBC’s Closing Bell Over Time on Feb. 4, Sacks revealed that stablecoins are one of the main focuses for the administration, alongside goals for advancing Bitcoin adoption and blockchain infrastructure. He pointed out that while the stablecoin market is booming, most of its growth has occurred outside the US, expressing a goal to “bring that innovation onshore.”

A fledgling industry worth around $227 billion, a whopping 97% of the stablecoin market is composed of US-pegged stablecoins like Tether’s USDT, which alone accounts for more than 60% of the total market capitalization, according to data from CoinGecko.

Will the Future ‘Digital Dollar’ Be in Stablecoins?

Sacks explained that stablecoins could play a role in strengthening the US dollar’s international dominance and expanding its digital usage. He argued that the adoption of stablecoins could generate “potentially trillions of dollars of new demand” for US Treasurys, which could help manage the national debt and reduce long-term interest rates.

Emphasizing the potential benefits of stablecoins, Sacks noted that they reinforce the US dollar’s dominance in global finance. On January 23, Trump signed an executive order reaffirming the administration’s commitment to maintaining the dollar’s sovereignty and, among other objectives, promoting the development and growth of legal, US-dollar-backed stablecoins worldwide. The order also directed the US government to develop and issue a central bank digital currency (CBDC) but clarified that US stablecoins are a form of digital dollar.

White House Legislative Aspirations and USDC Regulation

Sacks stated that the White House plans to introduce legislation to facilitate the issuance of stablecoins as part of its stablecoin strategy. For example, Circle’s USD Coin (USDC) is already issued and regulated within the US, with the company describing its stablecoin as “regulated and fully reserved.” USDC is the second-largest stablecoin after USDT, accounting for 24% of the total stablecoin market cap.

Unlike USDC, which is generally regarded as a regulated stablecoin, Tether’s USDT has faced regulatory challenges in various regions, including the European Union, where it is increasingly seen as noncompliant. Conversely, USDC has gained legal status in multiple international markets, including Canada and EU countries. In July 2024, it became the first stablecoin issuer to operate under the Markets in Crypto-Assets Regulation (MiCA) framework.

With USDT accounting for more than half of the total stablecoin market, it is likely to face increased scrutiny in the US as the Trump administration seeks to bring stablecoins onshore.