Stablecoins - the new petrodollar? How Trump is repeating Nixon's experience

During the election campaign, Donald Trump repeatedly mentioned Bitcoin in his speeches. Now that he has returned to the White House, he has actually signed a decree dedicated entirely to digital finance.

Bitcoin is not mentioned in this document, contrary to expectations, but the special role of stablecoins in the state strategy is indicated. Oleg Cash Coin figured out what the plan of the President of the United States is.

January Decrees

The team of US President Donald Trump has managed to convince a significant part of the community that the new White House administration will create a favorable climate for the development of cryptocurrencies worldwide. Business is expected to receive a new boost and the industry will penetrate deeper into the financial market, ultimately leading market participants to prosperity and success.

Perhaps that's how it will be. However, until it happens, it is worth carefully considering what exactly Trump's team is focusing on and what they see as the essence of cryptocurrencies. The long-awaited decree of the US president was published on January 23 on the White House website under the title 'Strengthening the Leadership of the United States in the Field of Digital Financial Technologies'.

The second point of the document is dedicated to "promoting and protecting the sovereignty of the US dollar, including through actions to globally support the development and growth of regulated stablecoins backed by the dollar".

This position is reinforced by a ban on all forms of development and promotion of the central bank's digital currency (CBDC). Together, these two points indicate an intention to open a green corridor for private stablecoins, the issuers of which are buying US government bonds.

In the other parts of the decree, there are no clear indications regarding other cryptocurrencies, including bitcoin. Although digital gold was definitely the flagship of any legislative initiatives during the election campaign, it was not singled out in the final document.

Nixon Experience

To understand the logic of the Trump team, one should remember the year 1971, when US President Richard Nixon canceled the link of the dollar to gold. The American leader took such measures due to continuously growing budget deficit and colossal expenses for the war in Vietnam

Despite the 'Nixon shock', the dollar managed to maintain its status as a global currency for international settlements. And abandoning the gold standard allowed the government to print virtually unlimited amounts of money.

The price of Brent crude oil after the abandonment of the gold standard. Data: Trading Economics. The abandonment of the standard worsened the powerful crisis in the energy market. In 1973, it was provoked by the Arab states, imposing an embargo on oil supplies to the countries that supported Israel in the Yom Kippur War. By 1974, the prices of black gold had increased approximately sevenfold, and by the end of the decade, by 20.

As early as 1973, the term 'petrodollars' appeared, denoting the exceptional importance of the US currency in trading energy resources: it turned out that the whole world needed oil, and it began to be sold only for dollars. This gave the US space to print an unlimited amount of debt obligations, which would still be in demand.

The situation has gotten out of control during the coronavirus pandemic. Since then, the U.S. national debt has been steadily increasing by several trillions of dollars per year. At the same time, there has been a decline in demand for U.S. government bonds due to some market participants shifting to alternative settlements. The U.S. leadership is facing economic problems reminiscent of 1971.

Oil, stablecoins, inflation

The key task of the government now is not to reduce the national debt, but to increase the demand for new obligations. And if we remember that the company Tether is among the top 20 largest buyers of US government debt, which it uses to issue USDT, the picture is shaping up in the best possible way. Now the authorities of the largest economy are directly stating that they support stablecoins worldwide. But on one condition: if they are backed by the dollar.

Of course, this is not exactly the same petrodollar as in the 1970s, but there is definitely a correlation. Especially if we take into account the inflation that was growing from the 1960s to the 1980s after long years of stability that followed the Second World War.

Inflation in the United States. Data: Macrotrends However, officials say that this time things are completely different. For example, former Federal Reserve Chairman (FRS) Ben Bernanke noted that today the American central bank has sufficient independence to make strategic decisions based solely on economic data, rather than short-term political considerations.

However, with the arrival of Donald Trump, the Fed may become quite dependent on officials. The US president has already stated that he understands monetary policy better than those who determine it.

"I will demand an immediate reduction in interest rates," Trump said on January 24th at the World Economic Forum in Davos.

Large companies began to embrace this trend as early as 2024. BlackRock actively promotes the concept of RWA in various industries, but at the same time, specialized crypto experts talk about the value of tokenizing only debt obligations.

"With the exception of treasury bonds, I believe that tokenized securities are practically worthless," said Nathan Allman, CEO of Ondo Finance.

Government bonds are exactly what the stablecoin market needs, which essentially involves buying, issuing tokens, earning interest, and buying again. This can continue for a very long time, if not indefinitely. The effectiveness of this approach has already been demonstrated by USDT and USDC issuers, who have earned billions just in 2024. It can be imagined what will happen with full approval from the US authorities.

Prospects of the cryptocurrency market

Following historical examples, we are facing another powerful crisis, accompanied by a widespread increase in prices for globally significant commodities, and a return to the dollar as the main transit unit between them.

Perhaps everything will work out, and we will see a more just financial system. But for now, only an attempt to create a new spiral of prosperity in debt relations is obvious.

Strangely enough, cryptocurrencies have become a central element in the development of these ideas. Government debts still remain at the center of the economy, and the distributed nature of blockchain allows this trend to be fully realized.