Economist and market commentator Peter Schiff raised doubts about the potential of stablecoins to uphold the U.S. dollar’s dominance on Wednesday, stating that their primary use would be in cryptocurrency trading.
What Happened: Schiff took to X, disputing the widely touted role of stablecoins in helping the U.S. economy.
“Rising federal budget deficits and higher inflation will erode demand for non–interest-bearing U.S. dollar–pegged stablecoins,” Schiff argued.
He added that stablecoins will fail to preserve the dollar’s role as the global reserve currency, as claimed, with their primary use case as trading pairs with other cryptocurrency tokens.
However, Schiff’s views were contested by critics. An X user, Frederick Frost, highlighted the use of stablecoins in countries with high inflation, arguing that individuals in these regions could trade their devalued national currency into Tether USDT/USD to maintain their buying power.
In response, Schiff said those people could use tokens pegged to other currencies or gold.
Why It Matters: Schiff’s comments come in the wake of the passage of the stablecoin bill by the Senate. President Donald Trump praised the move and urged Congress to get it on his desk without delay.
Treasury Secretary Scott Bessent said that the bill’s passage could help stablecoins grow into a $3.7 trillion market by the end of the decade, generate significant demand for U.S. Treasuries and T-bills.
Schiff has been opposed to regulating dollar-pegged stablecoins. “Let the free market regulated it. Lots of companies can issue stablecoins, have independent audits and offer privately insured deposits,” he wrote in a post from 2022.
Photo Courtesy: ddRender on Shutterstock.com
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