Can One Dollar Transform into Two? How Stablecoins Subtly Replicate the U.S. Monetary System, Alleviating Debt Pressure and Printing Money.

As Stablecoins Become Increasingly Popular in the Global Crypto Market, a Theoretical Concept Emerges: “Could Stablecoins, Through Their Issuance and Reserve Mechanisms, Invest in U.S. Treasuries While Circulating as Digital Currency, Thus Creating Two Units of Currency Value from One Dollar? Could This Even Serve as a Political Tool for the U.S. to Achieve ‘Debt Relief’ and Financial Decentralization?”

The Dual Currency Effect: How Can One Dollar Become Two Dollars?

According to crypto analyst @CryptoPainter_X on X, Tether issues an equivalent amount of USDT and invests the received dollars heavily into U.S. Treasuries. This dollar becomes both a Treasury asset and, through USDT, returns to the market in digital currency form. While this may seem like a normal operation, it could potentially create a “one dollar turns into two dollars” replication effect:
In other words: a user buys USDT with one dollar ➡️ Tether uses this dollar to purchase Treasuries ➡️ USDT can still be used as a payment tool in the market.
He believes that while this practice may not currently violate existing regulations, it effectively creates a form of dual circulation currency, similar to the reserve amplification principle of traditional banks, with the issuing entity being a private enterprise.

When Tether Becomes a Bank: Is USDT a Digital Version of “Fractional Reserve Banking”?

This mechanism is akin to Alibaba’s early wealth management tool “Yu’e Bao,” or the M2 system in the banking sector that creates deposits through credit. However, the difference lies in the fact that the circulation of stablecoins is entirely based on blockchain and digital transaction systems, existing outside the central bank’s view:
When USDT circulates only in the crypto market, this “currency multiplication” effect is not pronounced due to the closed system; however, once it enters the real economy, such as being used for consumption in the U.S., it could lead to an expansion of the dollar’s monetary base, akin to an alternative form of “hidden money printing.”

(Circle Plans to Apply for a U.S. Banking License; Will Stablecoin Issuers Become Crypto Banks?)

Treasury Vacuum Cleaner? Stablecoins Become an Export of U.S. Fiscal Pressure
As the seventh-largest buyer of U.S. Treasuries globally, Tether currently has about 80% of its reserve assets in U.S. Treasuries, amounting to over $100 billion. This means that the proliferation of stablecoins is effectively guiding global dollar liquidity to support U.S. fiscal policy, indirectly becoming a “Treasury vacuum cleaner.”
In this context, the U.S. not only further solidifies dollar hegemony through stablecoins but also avoids domestic inflationary pressures. This two-way effect of capital repatriation and leverage makes stablecoins a highly potential policy tool in the U.S. economy.

(Tether Was the Seventh-Largest Buyer of U.S. Government Bonds Last Year; Is USDT Really Too Big to Fail?)

CloverAI founder @JackyYi_06 pointed out that stablecoins could indeed become a new tool for the U.S. to “relieve debt pressure”:
If the U.S. government adopts a more open policy, such as the crypto-friendly direction advocated by Trump, stablecoins could become the world’s “debt outsourcing tool.”
Looking Back at Trump’s USD1: Does the U.S. Want to Reshape Dollar Hegemony with Stablecoins?
@JackyYi_06 continued, stating that if Trump is successfully re-elected and vigorously promotes stablecoin legalization policies, this strategy could quickly take shape, with potential advantages including:

• Using stablecoins as “decentralized dollars” to reach global markets
• Transferring debt to stablecoin holders
• Continuing the dominance of the dollar while diversifying inflation risks

Although Trump has explicitly opposed Central Bank Digital Currencies (CBDCs), he does not rule out using his (USD1) or private stablecoins as tools to promote a closer integration with blockchain in political strategy.

(WLFI Airdrops USD1; BitGo Launches Lock-Up Staking Services—Is WLFI Paving the Way into the Institutional Market?)

Can Stablecoins Become the New Financial Stars? Central Banks Will Not Stand Idly By
Jacobmei.eth, chairman of Jkopay, believes that even though the value amplification effect created by stablecoins is similar to the credit creation mechanism of banks, their attempt to break through the central bank’s control over the money supply and payment systems may find it difficult to succeed:
It is unlikely that central banks will allow any private currency to replace the status of legal tender; otherwise, tax revenues and financial sovereignty could collapse. This explains the acceleration of global efforts to launch CBDCs and stablecoin regulatory drafts to seize the dominant power in the future of finance.
He added, “Although stablecoins like USDT or USDC are already used in many payment systems like Pay or Visa, the actual settlement process of transactions still largely involves intermediaries exchanging them for fiat currencies.”
This design reduces the impact of currency price fluctuations on both parties in a transaction while also avoiding the direct use of stablecoins as the final payment medium, thus not touching the sensitive red line of central banks regarding monetary sovereignty.

The Leverage Truth of Stablecoins: Innovation, Illusion, or Risk?

In summary, the mechanism of stablecoins may indeed create a seemingly “double currency” asset effect, assisting the U.S. government in achieving its strategy of “relieving debt pressure” without inflation risks. However, without transparent regulation and international cooperation, they could ultimately become the trigger for the next financial storm.
Are stablecoins a leveraging tool of the new currency era, or a bubble trap under the illusion of financial power? What is certain is that this represents a three-way game between national sovereignty, financial innovation, and market trust.

Risk Warning

Investing in cryptocurrencies carries a high degree of risk, and prices may fluctuate dramatically, potentially resulting in the loss of all principal. Please assess the risks cautiously.