White House Advisor Drops Bombshell—Stablecoin Markets in Turmoil

A senior White House advisor just sent shockwaves through crypto markets—and stablecoins are taking the brunt. Here’s what’s unfolding.

The Domino Effect Begins

One offhand remark about "regulatory scrutiny" triggered a 24-hour selloff. Tether and USDC volumes spiked 300% as traders scrambled—proof that even "stable" assets panic when D.C. whispers.

Bankers Suddenly Remember They Hate Crypto

JPMorgan analysts—who praised blockchain last quarter—are now warning of "systemic risks." Funny how that works when stablecoins threaten their FX revenue.

What Comes Next?

Politicians want oversight, exchanges want clarity, and Wall Street? They just want it gone. Buckle up—this fight’s just getting started.

Stablecoin Law May Open New Territories for the Dollar

Sacks emphasized the current largely unregulated status of the stablecoin market, which surpasses $200 billion in value. He argued that establishing a legal framework could cause a rapid surge in demand for the U.S. dollar. According to him, the U.S. Treasury’s bond market could face a new wave of buyers: stablecoin issuers. This claim aligns with recent statements by Bitwise’s CIO, Matt Hougan, who suggested that the stablecoin market could soon reach a size of $2.5 trillion.

Recent bond investments by Tether further bolster this expectation. The company has reportedly acquired approximately $120 billion in bonds according to U.S. Treasury data, surpassing Germany to become the world’s 19th largest bondholder. This scenario suggests that stablecoin issuers could serve as an alternative capital channel for the U.S. economy. Sacks stressed that if enacted swiftly, the regulatory change could be as distinct as “night and day.”

Political Tensions Shadow, But Support Remains Strong

Despite ongoing political debates over the stablecoin bill, a critical milestone was reached in the Senate last Monday with a vote of 66 to 32 in favor. The recent support from certain Democrat senators who were previously opposed indicates bipartisan backing for the regulation. The bill mandates that stablecoins be backed 100% by U.S. Treasury bonds or U.S. dollar-equivalent assets. It also includes measures against money laundering, oversight for foreign issuers, and registration and auditing requirements for projects with a market cap exceeding $50 billion. Currently, only Tether and Circle surpass this threshold.

Senator Elizabeth Warren opposed the bill, citing the TRUMP family’s connection to a stablecoin project called USD1. Senator Richard Blumenthal suggested that Trump-linked DeFi projects could be susceptible to foreign influence. While Sacks did not directly address these claims, he pointed to the bill’s broad support, citing that 15 Democrat senators voted in favor. He highlighted that the possibility of blocking the legislation was now eliminated. According to him, the law will not only enhance digital payment systems but also cement the U.S. dollar’s influence in the online world.

The U.S. administration is also prioritizing artificial intelligence. Sacks mentioned an increase in infrastructure, energy, and innovation investments, stating that the U.S. must win the “AI race.”