United States dollar-pegged stablecoins could alleviate the government’s debt crisis and help the country's dollar keep up with China, which has been flexing its muscles in international trade, says a former House speaker. 

“The U.S. is headed toward a predictable yet avoidable debt crisis,” and dollar-backed stablecoins are “one answer” to keep the dollar attractive, argued Paul D. Ryan in a June 13 Wall Street Journal opinion piece.

Ryan served as the 54th speaker of the U.S. House of Representatives from 2015-2019. The speaker of the House is considered one of the most powerful positions in American politics with an ability to shape the legislative agenda. 

“There would be an immediate, durable increase in demand for U.S. debt, which would reduce the risk of a failed debt auction and an attendant crisis,” said Ryan, who now serves as a policy council member at cryptocurrency-focused venture capital firm Paradigm.

The $162 billion stablecoin market already provides a huge source of demand for U.S. Treasurys, and its role in preserving the dollar’s dominance “couldn’t be timelier,” he stressed.

It allows “cheap, reliable financing for fiscal spending” on blockchain rails, which could help the U.S. dollar sustain its “substantial influence over the global financial system.”

He noted that China has been integrating the Chinese yuan on various digital infrastructure investment platforms in several emerging markets and that the U.S. must now find its own solution before it’s too late.

“The U.S. can’t afford to sit idly as its largest international competitor taps latent demand for safe and convenient digital money.”

“Stablecoins backed by dollars provide demand for U.S. public debt and a way to keep up with China.”

Ryan said a formidable regulatory framework for stablecoins already has bipartisan support in Congress, which could help “dramatically expand the use of digital dollars at a critical time.”

Related: ‘Yield-bearing stables’ are not money or stablecoins: Agora’s van Eck

The opinion piece received praise from several industry leaders, including Emin Gün Sirer, CEO of Ava Labs.

“Stablecoins are one of the best things to come out of crypto, and they help maintain the dominance of the dollar around the world,” Gün Sirer posted to X.

However, Adam Gladstein, the Human Rights Foundation’s chief strategy officer, said more stablecoin use would continue to “perpetuate and reinforce” the same financial system that Bitcoin serves to “subvert and replace.”

Magazine: Unstablecoins: Depegging, bank runs and other risks loom