On July 19, a United States court gave Binance the approval to invest customer funds into US Treasury Bills.
According to the order handed down by the United States District Court for the District of Columbia, Binance will be able to invest “certain” customer funds through the use of a third-party investment manager as long as Binance ensures the funds are not being invested back into the company or any of its related entities.
The court order also stipulated that Binance must produce data outlining any costs associated with maintaining the custodied US treasury investments in its monthly report detailing its business expenses and operations.
Stablecoins: alA way to extend US dollar dominance by decades?
The court approval allowing Binance to invest customer funds in US Treasury Bills foreshadows cryptocurrency’s potential role of shoring up demand for the ailing US dollar in the face of de-dollarization efforts by the BRICS nations.
More specifically, collateralized stablecoins have been floated as a way to potentially extend US dollar dominance by decades through buying and holding US debt instruments, thereby offsetting some of the massive inflation brought on by years of quantitive easing, poor monetary policy, and reckless fiscal policy.
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The Tether (USDT) stablecoin is one such example. In 2023, Tether held $72.5 billion in US Treasuries, on par with certain developing nation-states. The firm stresses the overcollateralization of its dollar-pegged stablecoin as a form of insurance against a major collapse.
Former United States speaker of the House Paul Ryan also touched on how stablecoins can alleviate the debt crisis and allow the US dollar to remain competitive in global trade markets.
Ryan pointed to the signifcant demand dollar-pegged stablecoins generate for the US dollar and US debt instruments, which back the value of the fiat-equivalent tokens.
Others, like Alex Gladstein, the chief strategy officer of the Human Rights Foundation, believe that dollar-pegged stablecoins only perpetuate the broken fiat-centric system that decentralized digital were meant to supplant.
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