Public domain image via White House
To say that we’re living in interesting economic times would be an understatement.
Love him or hate him, President Trump has upended the economic cart and people are scrambling to pick up pieces and figure out how to best move forward in the new, uncertain economic marketplace.
For you, personally, when looking into this economy and making your plans for it, there is one aspect and one piece of legislation coming down the pipe that too few are considering…
… but that would be good for you to know about.
So, to start, let’s talk about the dollar.
What is going on with the U.S. dollar?
One of the defining aspects of the U.S. dollar over the last several decades has been its strength compared to other currencies.
In fact, the U.S. dollar has been the world’s reserve currency since the 1950s. This means two things:
- In international transactions between nations that don’t share a common currency, buyers pay in (and sellers accept) dollars.
- Because of its role as an intermediary currency, central banks from nearly every nation own dollars as a store of value.
For example, the U.S. dollar is OPEC’s primary currency used for pricing and selling crude oil in the global marketplace.
Still, even with all of that going for it, the inflation over the last few years and the threats and implementation of U.S. tariffs on many imports have damaged the dollar’s role in international trade.
Art Raymond with Deseret News put it this way:
the value of the U.S. dollar hit a two-week low with investors “grappling with elevated uncertainty around U.S. fiscal policy and the role of federal debt and the dollar as portfolio diversifiers and safe havens,” Danske Bank analysts said in a note, per a report from the Wall Street Journal.
To put it another way, people worldwide are nervous because of Trump’s moves on the economy, such as tariffs and the deficit spending implied by the recent budget. After all, tariffs are intended to reduce international trade by dissuading U.S. buyers from importing foreign goods. Less international trade means less demand for the dollar (and less reason for central banks to stockpile dollars).
Less dollar demand makes it harder for the U.S. dollar to maintain its value.
Now, if you’re asking, “I thought that this was a cryptocurrency site! What’s all this talk about the value of the dollar got to do with crypto?”
Just stay with me!
That’s where we’re going now.
Crypto comes to save the day?
The U.S. Senate may be concerned about the U.S. dollar – its role as global reserve currency specifically.
Their method? Cryptocurrency.
To clarify, the Senate could save the dollar by passing a bill (which currently has moved out of committee to a floor vote) that could end up propping up the value of the U.S. dollar compared to other world economies by doing something that the dollar hasn’t done in decades: Tying it to something else of value, in this case a new stablecoin.
Now, if you’re not familiar with stablecoins, they are cryptocurrencies whose value is pegged to something, usually external to the crypto market. Most commonly the U.S. dollar, but we’ve also seen stablecoins pegged to the euro and even a couple of gold-backed stablecoins.
Tether is the most famous and most notorious example of a stablecoin. Another more recent example was the Trump family’s World Liberty Financial and their dollar-based stablecoin.
The Senate’s bill seems to intend that the dollar lean on a stablecoin to keep demand (and purchasing power) consistent. Yes, that’s quite an about-face! Frances Yu of MarketWatch writes,
The bill, called the Guiding and Establishing National Innovation for U.S. Stablecoins Act – or GENIUS Act – aims to provide a regulatory framework for stablecoins and their issuers. If enacted, it would be the first legislation in the U.S. regulating the $248 billion stablecoin market.
Here’s why that is a big deal. Thomas Cowan, head of tokenization at Galaxy Digital, explained:
Stablecoins are the “bedrock” of tokenization, as a dollar-backed stablecoin is essentially a tokenized dollar.
And because of that…
Should the bill become law, crypto bulls see potential for it to drive wider adoption of dollar-linked stablecoins, and possibly to strengthen the battered U.S. dollar. Cryptocurrencies also may end up playing a much bigger role in the broader financial system, analysts said.
Or to put it simply…
The GENIUS Act supports the dollar and promotes crypto acceptance
And for the average American (whether or not they’re crypto investors), these are good things.
A stronger dollar supports our purchasing power. Essentially, a stronger dollar gives us more bang for our buck.
That means grocery bills go down, gas prices fall and families have greater opportunities for investment. Good news! Because our national personal saving rate is a pitiful 3.9% right now. Understandable – when people struggle to pay the bills, savings is usually an early casualty.
A stronger dollar gives us additional opportunities to save. A higher savings rate can drive asset prices higher, too. When all else is equal, increased demand leads to increased prices.
But that’s not all!
As we’ve seen for years now, regulatory acceptance and clarity is key for the crypto sector. Increased regulation of an asset class increases adoption because it helps the typical investor feel safer and more confident about the asset in question.
Essentially, clear and common-sense laws that protect investors and codify requirements are the bedrock of asset acceptance. This regulatory clarity leads to increased adoption. Increased adoption drives demand, and demand supports prices.
In other words, the GENIUS Act has the potential to drive cryptocurrencies to new levels. More and more corporations, institutional investors and everyday investors will take another look at crypto. One that’s less hindered by regulatory ambiguity. Crypto’s upside potential is incredibly clear – and regulatory clarity removes one type of risk.
All this is very, very good news for those of us who’ve already diversified our savings with cryptocurrencies.
But maybe you haven’t? Maybe you’ve been waiting for additional regulatory clarity? A new wave of adoption? If so, your time has come! There’s no reason to wait another minute – especially considering you can open your Digital IRA online – right now, any time day or night. It takes less than 10 minutes and opens up a whole new world of asset diversification.
Or maybe you’re just starting your cryptocurrency journey and want to begin your due diligence? No worries! A great place to start is our free Essential Guide to Digital IRAs. And our Digital Currency Specialists are standing by to help at 1 (800) 299-1567.
