Trump’s $10 Trillion Crypto Bet: Stablecoins To Replace Eurodollars? #CriptoNews

“I think over the next, call it 20ish years, probably the entire eurodollar market is moving to stablecoins,” predicts Austin Campbell, professor at NYU’s Stern School of Business and CEO of WSPN USA. It’s a bold claim – suggesting that a $210 billion market could absorb a system 50 times its size. Yet the prediction becomes more plausible when you understand how the offshore dollar market evolved, and why stablecoins represent its natural digital successor.

The Ghost in the Machine: Understanding Eurodollars

The modern financial system runs on a form of dollars that most Americans have never heard of. Eurodollars – dollar deposits held outside the U.S. banking system – represent between $10-13 trillion in value. Born in the 1950s as a way for Soviet banks to hold dollars beyond U.S. reach, they grew into the backbone of international finance. Today, they’re how Japanese manufacturers pay for Indonesian raw materials and how European banks fund American mortgages.

This massive market emerged not through design but necessity. When Cold War politics made direct dollar holdings risky for Soviet institutions, they began keeping dollar deposits in European banks. These banks realized they could lend these dollars without maintaining the same reserves U.S. banks required, creating a more efficient (if less regulated) dollar funding market.

The $10 Trillion Dollar Opportunity

Most Americans have never interacted with a stablecoin or a eurodollar, and many struggle to understand their value as they are well served by their domestic banking system.

But Americans aren’t the only users of US dollars. A large percentage of dollars serve users outside America. Of the $2.3 trillion in physical U.S. banknotes, the Federal Reserve estimates that 40-75% circulate abroad. Traditional bank deposits show a similar pattern – the $18 trillion in U.S. domestic deposits is comparable to the size of the $10-13 trillion Eurodollar market. These numbers reveal a crucial reality: trillions of dollars already sit outside the U.S. banking system, held by individuals and businesses who need dollars but lack access to American banks.

Stablecoins aren’t creating this demand for offshore dollars – they’re simply providing a more efficient solution for it.

What Are Stablecoins?

Originally stablecoins emerged as digital casino chips for crypto speculators. Just as a casino allows you to exchange dollars for chips that can be used throughout their property, stablecoins let you convert traditional dollars into digital tokens usable across the entire internet. And just like casino chips, their value is backed by real dollars held in reserve – at least in theory.

The story of stablecoins can’t be told without mentioning Tether (USDT), which remains the largest stablecoin with a market cap of over $100 billion. Founded in 2014 to solve crypto traders’ need for a stable trading instrument, Tether’s history reads like a thriller. Early controversies about its reserves – which once included commercial paper and mysterious “other investments” – gave way to increased transparency following regulatory scrutiny. Today, Tether primarily backs its tokens with U.S. Treasuries, managed by Cantor Fitzgerald under CEO Howard Lutnick (pictured above) – who is set to serve as Secretary of Commerce. This institutional evolution mirrors the broader transformation of the stablecoin industry from crypto frontier to mainstream finance. Newer entrants like Circle’s USDC have taken a more regulated approach from the start. Circle’s partnership with BlackRock for reserve management signals the institutionalization of the sector.

Yet it is still early days for stablecoins. As analyst Simon Taylor explains, “We’re in the dial-up era of Stablecoins, so they’re still janky, and connecting is slow and painful. In time, Stablecoins will create an abstraction layer above existing payment rails, just as the Internet did over the telcos.” Nevertheless, Taylor’s analysis reveals why stablecoins aren’t just cheaper – they’re fundamentally better infrastructure. Traditional international payments involve a complex web of correspondent banks, SWIFT messages, multiple compliance checks, and days of settlement time. The genius of stablecoins lies in collapsing this complexity into a single layer. A stablecoin transfer is more akin to handing someone cash than initiating a bank wire – but it can happen instantly across borders.

What Are Stablecoins Used For Today?

Recent research from Castle Island Ventures and Visa reveals the scale of adoption already underway. Stablecoin transaction volumes were estimated at $450 billion per month—roughly half of the just over $1 trillion that Visa processes monthly. Adoption is growing fastest in emerging markets. The study found that 47% of users in developing economies primarily use stablecoins for dollar savings, while 43% cite currency conversion as their main goal.

This adoption isn’t merely speculative. In Nigeria, where foreign exchange shortages are chronic, stablecoins have become crucial for international trade. As Yellow Card, Africa’s largest stablecoin platform notes, “70% of African countries have a FX shortage that has been declared a crisis.”

The latest evolution comes from yield-bearing variants such as Mountain Protocol. Just as Eurodollar deposits typically offered higher interest rates than domestic U.S. deposits, new stablecoins are finding ways to pass along the yields from their Treasury holdings to users. This development suggests how stablecoins might eventually compete with traditional bank deposits.

Are Stablecoins The External Revenue Service’s Trump Card?

In his inauguration speech, Donald Trump argued for the creation of an “External Revenue Service” to collect revenue from other countries. Given that stablecoin advocate Secretary of Commerce Howard Lutnick will be involved in its creation, perhaps the president already had the shift from Eurodollars to stablecoins in mind.

The transition from Eurodollars to stablecoins could mark a significant shift in America’s global financial power. Eurodollars emerged during the Cold War, when U.S. policymakers saw value in allowing European banks to create dollar liquidity beyond American shores. Today’s geopolitical reality is markedly different. In an era of great power competition and economic warfare, the diffuse Eurodollar system may have outlived its strategic utility.

Stablecoins offer Washington a chance to recentralize control over offshore dollars. When foreign banks create Eurodollars, they share in the profits of dollar dominance. In contrast, major stablecoin issuers back their tokens primarily with U.S. Treasuries, directly funding American government debt. This shift would align with the more zero-sum view of international relations championed by figures like President Trump, concentrating the benefits of dollar dominance within U.S. borders.

The winners in this transition would be concentrated in America: the U.S. Treasury would see increased demand for its debt, while U.S.-based stablecoin issuers would become the new gatekeepers of global dollar liquidity. Users in emerging markets would gain better access to dollars, potentially accelerating global dollarization. The losers would be equally clear: non-U.S. banks would see their Eurodollar business evaporate, while weak local currencies would face even steeper competition from digital dollars. Traditional payment intermediaries would find their business models undermined by more efficient stablecoin rails.

$10 Trillion In Stablecoins By 2050

Can stablecoins really absorb the $10 trillion Eurodollar market? The better question might be: why wouldn’t they? They offer the same basic service – dollar exposure outside traditional U.S. banking – with added benefits of programmability, transparency, and efficiency.

The transition won’t happen overnight, but as Campbell suggests, the direction seems clear. Just as Eurodollars emerged to meet the 20th century’s need for efficient dollar funding, stablecoins are evolving to serve the digital economy’s demand for programmable, borderless dollars.

The real question isn’t whether digital dollars will become ubiquitous, but whether the U.S. will embrace and shape this transition to maintain its financial advantages in the digital age.