Trump strengthens Tether and Circle by linking stablecoins to the dollar

President Donald Trump signed an executive order to have dollar-backed stablecoins. This is positive news for Tether and Circle, which account for almost 90% of the stablecoin market value.

Stablecoin laws have been under review in the US for some time, and Trump’s decision now sets a deadline for advising on a proper legal framework within the next six months.

Trump’s administration believes stablecoins could help preserve the dollar’s value

Trump leans towards dollar-tied stablecoins, signing an executive order that should establish a working group to advise the White House on digital asset regulations, including those promoting growth and development of stablecoins.

The working group is also expected to involve federal agencies like the Treasury Department, Justice Department, Securities and Exchange Commission, and Commodity Futures Trading Commission as they deliberate on the best policies.

Trump has also stopped all work on a central bank digital currency, allowing more room for the growth of dollar-backed stablecoins. His administration expects that these tokens could strengthen the US currency and dominance.

Tether and Circle’s top executives have been pushing for stablecoins for a while now. In June last year, Tether CEO Paolo Ardoino commented:

“Stablecoins backed by dollars provide demand for U.S. public debt. USDt is being used by more than 300M people across the world as the digital dollar, providing a lifeline utility to entire communities in developing countries.” – Paolo Ardoino

Since then, stablecoins have increased their reach and are now actively used to make payments and transfer money.

However, there are still concerns over USDC and USDt’s past ties to criminal activity. In 2023, TRM Labs revealed that Tether’s USDT was the most-used stablecoin for criminal activity, including terrorism financing. Even in 2021, Tether paid the Commodity Futures Trading Commission a $ 41 million settlement fee after being accused of lying about its reserves.

Nevertheless, Tether expects that new regulations will allow more corporations to get the guidance they need to operate in the crypto arena.

Rosa says that without proper checks, there could be another crypto failure

Brunella Rosa, head of research at Rosa and Roubini Associates, noted there could easily be another crypto crash without the proper checks and balances despite the fact that the United States has the competitive advantage of being the first to advocate for crypto.

The Financial Stability Board even cited risks to financial stability with the rise of interconnections between crypto and traditional markets.

Vincent Chok, CEO of Hong Kong-based First Digital, says Trump’s executive order benefits US-based issuers and has a global ripple effect, supporting the growth of USD-backed stablecoins across jurisdictions.

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