Eswar Prasad, professor at Cornell University, argues that dollar-backed stablecoins are strengthening the US dollar’s position in the global financial system rather than threatening it. Dollar-pegged tokens account for roughly 98% of the global stablecoin market by capitalization, with issuers holding around $125 billion in US Treasury bills. Treasury Secretary Scott Bessent projects stablecoin market growth to range between $2-3 trillion, with estimates for the early 2030s reaching up to $4 trillion. Prasad suggests that central bank digital currencies have shown limited effectiveness in countering private dollar-backed stablecoins, potentially accelerating dollarization in emerging markets. The Fed has explicitly refused to backstop stablecoin projects, leaving holders exposed in stress scenarios unlike traditional bank depositors protected by FDIC insurance.
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