Paul Ryan Advocates for Stablecoins to Combat U.S. Debt Crisis

Former House Speaker Paul Ryan has suggested that stablecoins could be pivotal in mitigating a looming U.S. debt crisis. 

In an opinion piece, Ryan addressed the increasing importance of dollar-backed stablecoins, which utilize U.S. treasuries as their backing, to maintain demand for U.S. debt and counterbalance the rising international influence of the Chinese yuan.

Ryan emphasized the potential of stablecoins to address the growing U.S. debt, currently exceeding $34 billion. He warned that the failure to manage budgetary spending could jeopardize the American financial system. A failed Treasury auction, he argued, would trigger severe budget cuts and undermine confidence in the U.S. dollar.

According to Ryan, stablecoins could provide a new source of demand for U.S. treasuries. Unlike traditional state-backed debt holders, stablecoins are utilized by institutions and individuals in economically weaker regions. This broader demand base could stabilize U.S. debt markets and maintain the dollar’s status as the global reserve currency.

Counteracting Chinese Influence in Global Markets

Ryan also highlighted the role stablecoins could play in countering China’s growing influence in global financial markets. As nations like Saudi Arabia and China reduce their U.S. treasury holdings and explore non-dollar payment systems, stablecoins could serve as a tool to reinforce the dollar’s dominance.

Ryan noted that stablecoins, particularly those operating on public blockchains, would come with “deeply American values of freedom and openness.” Promoting dollar-backed stablecoins could offer a robust alternative to the Chinese yuan, particularly in emerging markets where China is expanding its influence through investment and infrastructure projects.

Support from Industry Leaders

Ryan’s views align with statements from key players in the stablecoin market. Tether, the issuer of USDT—the largest stablecoin by market capitalization—has previously addressed the potential of stablecoins to support financial stability. 

In a September report titled “Tether USDT and U.S. Treasury Dynamics,” the company highlighted that declining foreign purchases of treasuries could be offset by stablecoins, thereby supporting both U.S. and global financial stability.

Ryan’s call for serious consideration of stablecoins underscores the need for innovative solutions to the U.S. economy’s complex challenges. By leveraging the demand for dollar-backed stablecoins, Ryan believes the U.S. can reduce the risk of a failed debt auction and avoid a potential fiscal crisis.