Stablecoins and Bitcoin: A Symbiotic Relationship
Sam Lyman, the research director at the Bitcoin Policy Institute in Washington, D.C., discusses the interconnected nature of stablecoins linked to the U.S. dollar and Bitcoin (BTC). He believes that their relationship creates mutual advantages, particularly as adoption rates grow.
He explains that Bitcoin is significant for the American financial system because the most prominent BTC trading pair is or Tether’s USDt (USDT), which is backed by cash reserves and short-term U.S. government securities. “Bitcoin is usually traded in dollars, establishing a mutually beneficial dynamic between BTC and the dollar system,” Lyman notes. This perspective challenges the prevailing idea that Bitcoin undermines the dollar.
Lyman also draws parallels between Bitcoin, dollar-pegged stablecoins, and the historical petrodollar framework. Since the early 1970s, oil sales have been conducted in dollars, which has bolstered demand for the currency.
He urges U.S. lawmakers to maintain the foundational principles of stablecoin regulation, as seen in the GENIUS framework, to enhance and safeguard U.S. dollar authority while fostering geopolitical strength.
China’s Digital Currency Strategy
In a discussion about China’s stance on Bitcoin and stablecoins, Lyman points out that the Chinese government has repeatedly deemed them significant risks to its capital control measures, which are vital to the nation’s economic model. “China’s economy is heavily reliant on these controls to prevent affluent individuals from transferring money abroad,” he explains.
This explains China’s decision to reaffirm its prohibition on stablecoins in 2025, opting instead for a digital renminbi, a central bank digital currency (CBDC) designed to manage capital flows and secure a substantial share of foreign currency transactions. CBDCs are centralized and fully programmable by the issuing government or bank.
However, Lyman mentions that these bans haven’t effectively reduced illicit cryptocurrency activities, including Bitcoin mining and the movement of stablecoins in and out of China. Even with a complete ban on Bitcoin mining, Chinese mining operations still account for over 36% of the global mining pool hashrate, which plays a crucial role in maintaining network security.
