Stablecoins are usually described as a simple crypto tool — a way to hold digital money without the crazy price swings of Bitcoin. But when you zoom out, stablecoins are doing something much bigger.
They are quietly changing where money around the world flows:
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In the short term, they pull global money into the U.S. dollar and U.S. government debt
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In the long term, they may push countries to slowly build ways to rely less on the dollar
The Risk: Most stablecoins — especially USDT — are not held by Americans.
This isn’t about an overnight collapse or a coordinated attack. It’s about incentives, control, and what happens when a lot of money sits outside the system that ultimately backs it.
Short Term: Stablecoins Pull Global Money Into the U.S.
Right now, stablecoins make the U.S. dollar stronger, not weaker.
The biggest stablecoins — especially USDT — are basically digital dollars. When someone buys USDT, the issuer takes that money and invests most of it in short-term U.S. government debt, like Treasury bills.
So the flow is simple:
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People around the world want stablecoins
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They buy USDT using local currency or crypto
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The stablecoin company receives that money
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That money is invested in U.S. Treasuries
In plain terms:
Global savings → stablecoins → U.S. government debt
Stablecoins end up acting like a global dollar savings system, even for people who don’t live in the U.S. or use U.S. banks.
For people in countries with:
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Inflation
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Weak currencies
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Unstable banks
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Capital controls
Stablecoins are often the easiest escape hatch. With just a phone, they can quietly move their money into dollars.
Why This Looks Like the U.S. “Pulling” Liquidity From Other Countries
Traditionally, when money fled weaker countries, it went through banks, governments, or the IMF. Stablecoins cut all that out.
Now:
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Money can leave a country instantly
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No permission is needed
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No U.S. bank account is required
The result is that liquidity drains out of fragile currencies and ends up funding the U.S. government.
This doesn’t require a secret U.S. plan. It’s simply how the system works:
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The dollar is trusted
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U.S. debt is considered safe
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Stablecoins make access frictionless
But from the outside, it can feel like the U.S. is “stealing” liquidity — because instability elsewhere automatically feeds strength at the center.
Who Actually Owns the Stablecoins?
Here’s a critical piece that often gets missed.
Most stablecoins — especially USDT — are not held by Americans.
They are mostly held by:
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Offshore exchanges
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Foreign trading firms
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Non-U.S. institutions
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Individuals outside the U.S. banking system
In other words:
The liabilities are global, but the backing assets are American.
This creates a strange imbalance.
The U.S. government debt market is supporting a digital dollar system that is:
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Used mostly outside the U.S.
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Controlled by private issuers
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Held largely by foreign entities
The Hidden Risk: What Happens If Offshore Holders Rush for the Exit?
As long as confidence holds, this system works fine.
But if something shakes trust in USDT — regulation, geopolitics, market panic, or a major exchange failure — offshore holders could rush to redeem or dump USDT all at once.
If that happens:
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USDT holders sell or redeem tokens
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Tether must raise cash quickly
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To do that, it may have to sell U.S. Treasuries
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Large, fast selling can stress Treasury markets
This is similar to a bank run — except:
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It happens outside the U.S. banking system
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There is no Federal Reserve backstop
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The sellers are foreign and don’t answer to U.S. regulators
In simple terms:
Foreign holders could indirectly force U.S. Treasuries to be sold by dumping stablecoins.
This wouldn’t be done to “attack” the U.S. — it would be self-protection. But the impact could still be severe.
Why a Stablecoin Crisis Still Helps the Dollar (Short Term)
Here’s the irony.
Even if USDT depegs:
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Crypto markets would be hit first
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Stablecoin trust would collapse
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Offshore dollar substitutes would be questioned
And then what happens?
People rush into:
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Actual U.S. dollars
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U.S. banks
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Direct Treasury holdings
So even though Treasuries might be sold in the short run, the dollar itself usually gets stronger during crises.
That’s why triggering a stablecoin collapse is a bad way to weaken the dollar.
Long Term: Learning How Not to Depend on the Dollar
But over the long term, something else happens.
Stablecoins prove that:
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Money can move globally without banks
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Settlement doesn’t need SWIFT
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Digital currency can scale fast
Once countries see this, they start asking:
“Why should this system only work for dollars?”
So instead of trying to crash the dollar, foreign governments and institutions slowly:
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Settle more trade in local currencies
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Build alternative payment rails
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Hold more gold or non-USD assets
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Reduce how much new dollar debt they take on
They don’t dump dollars.
They just stop needing as many new ones.
The Big Picture (Very Simply)
Right now:
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Stablecoins suck money out of weak currencies
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That money funds U.S. government debt
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Offshore holders carry the risk
In a crisis:
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Foreign holders could dump stablecoins
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That could force Treasury selling
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But the dollar itself likely gets stronger
Over time:
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Other countries try to avoid this trap
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They build alternatives
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Dollar dominance slowly becomes less automatic
Final Takeaway
Stablecoins strengthen the U.S. dollar today by pulling global savings into U.S. debt — even as they concentrate risk in offshore hands that could force sudden liquidations. At the same time, they teach the world how to build money systems that don’t rely on the dollar forever.
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