President Trump advocates for cryptocurrency adoption
The world of finance is abuzz with the latest developments in digital currencies, with several key players making significant moves in this evolving landscape.
In the United States, President Donald Trump's signing of the "Genius Act" in July marked a historic moment, creating a comprehensive, binding legal framework for cryptocurrency for the first time. This move is expected to pave the way for the USD Coin, a digital dollar based on decentralized blockchain databases, to become part of future public financial strategy in the USA. Recognized as an official means of payment alongside the dollar, the USD Coin is suitable for transfers such as e-commerce via the internet or cross-border payments worldwide.
However, the current interest rates, ranging from 4.25 to 4.50 percent, are relatively high compared to the European Central Bank's main refinancing rate of 2.15 percent. This discrepancy has been a subject of criticism by President Trump, who has been vocal about his dissatisfaction with the US Federal Reserve and its chairman, Jerome Powell, demanding lower interest rates.
The Fed and its President, Powell, now face the question of how much their commodity, the "real" dollar, will be affected by the rise of digital currencies like the USD Coin. The Fed's Board of Governors is set to discuss the topic of stablecoins at a conference on payments innovation in Washington on October 21, 2025, as part of an ongoing dialogue about the future of digital currencies.
Across the Atlantic, the European Central Bank (ECB) is also gearing up for a potential shift. Following the stablecoin decision, ECB President Christine Lagarde is likely to accelerate her plans for a digital euro, or D€. Central bankers hope that strict regulations regarding reserves, licenses, and transparency will establish USD Coin as an official digital payment method without losing trust in the financial system.
However, the rise of stablecoins is not without its challenges. The BIS's annual report for 2025 warns of risks related to financial crime and a threat to monetary sovereignty associated with stablecoins. The BIS recently hosted an "Innovation Summit" discussing these challenges, along with others beyond inflation and economic growth, including the climate crisis and the rapidly increasing public debt of the USA.
In the midst of this, the US President's ambition to redirect global demand for digital dollars into a stream of interest-free capital flows towards the US Treasury is a contentious issue. If the USD stablecoin becomes the leading currency, interest payments will no longer leave the country, according to Paymentbanking.com. However, if stablecoins must be backed by US government bonds, Trump's government will find it easier to refinance its debt at a lower interest rate.
The dominance of US payment service providers like Visa, Mastercard, and PayPal in the European market is another factor to consider. The total debt of the USA, the highest in the world with a ratio of around 120 percent of GDP, is twice as high as that of Germany. This debt, coupled with the potential challenges posed by stablecoins, presents a complex landscape for global finance in the coming years.
As the world continues to grapple with these changes, one thing is clear: the future of finance is digital, and stablecoins are set to play a significant role in this transformation.
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