Stablecoins drive US dollar dominance in global markets

Stablecoins are increasingly viewed as a critical tool to bolster the United States dollar's dominance in global financial systems, according to Bryan Pellegrino, CEO of LayerZero Labs.

In an interview, Pellegrino emphasised the strategic importance of dollar-pegged stablecoins, describing them as the "single best tool" for maintaining the US dollar's hegemony.

“Stablecoins for the US dollar are the last Trojan Horse or vampire attack on every single other currency in the world — whether it is Argentina, Venezuela, or other countries facing massive inflation,” he stated.

LayerZero Labs, which developed the LayerZero ICRYPTO:ZRO) interoperability protocol, was recently selected by Wyoming as the distribution partner for its state-backed stablecoin.

Pellegrino highlighted that stablecoins' cross-border accessibility and ability to drive demand for the US dollar make them a powerful instrument for reinforcing its status as a global reserve currency.

Support for stablecoins is expected to grow at both federal and state levels due to their role in boosting the dollar's position in foreign exchange markets and creating a financial moat around its reserve currency status.

The demand for stablecoins is also reflected in their impact on US debt instruments.

Pellegrino pointed to Tether’s emergence as one of the largest buyers of US Treasury bills, recently becoming the seventh-largest holder of such securities, surpassing countries like Canada and Germany.

This trend underscores the connection between stablecoin issuers and US financial stability.

US Treasury Secretary Scott Bessent echoed similar sentiments at the White House Crypto Summit on March 7, noting that leveraging stablecoins would be a priority for extending US dollar hegemony in 2025.

A 2023 Chainalysis report revealed that over 50% of digital asset value transferred to Latin American countries was denominated in stablecoins.

Countries such as Argentina, Brazil, and Venezuela rely on these assets due to their low transaction fees, stability, and near-instant settlement times.