Izabella Kaminska

🧵1/ I wonder how many people realise that what's really going on with stablecoins is a massive US statecraft play to re-dollarize the world on its own terms. You could even call it a "re-stablization op" (yep - there's a gag in there).

2/ My analysis is that the reason why many countries are panicking about the upcoming dollar onslaught is because it's a backchannel way to rebase the system, and force 2008-era capital holes to be finally written down.

3/The intent is also to re-establish the supremacy of the dollar in markets where people can't trust their own governments, via a freely floated currency that can actually offer proper price discovery against domestic currencies.

4/ Yes, yes. The dollar's problems are as bad as everyone else's. But there's a subtle clause in the GENIUS Act which offers a clue to how this rebasing could will happen. It relates to the first-in-line clause.

5/ There's a deeper analysis in the latest edition of the Blind Spot, https://the-blindspot.com/in-the-blind-spot-the-great-recalibration/

6/ Evidence of the ECB's anxiety about the threat being posed by dollar stablecoins is all over this paper commissioned by the EU Parliament. https://www.europarl.europa.eu/RegData/etudes/IDAN/2025/764387/ECTI_IDA(2025)764387_EN.pdf

7/ This is why there's a big squabble currently happening between the ECB and Commission about whether coins issued by the same issuer in multiple jurisdictions should be treated as fungible or not.

8/ Interestingly, the GENIUS Act remains (for now) strategically ambiguous about the fungibility of on and offshore coins issued by the same issuer. This is classic US statecraft, and, quite smart in terms of the US having its cake and eating it.

9/ Again, this is strictly my analysis, but obviously the biggest impact of a pro fungibility treatment would be for Tether (especially if it establishes a regulated onshore arm).

10/ Yet, here, the fact that Tether is based in El Salvador could prove a particularly useful factor for controlled re-dollarization in parts that correspondent banks can no longer reach post 2008, due to the original capital hole in the eurodollar system having to be plugged by U.S. taxpayers.

11/ This is just my theory, but consider that Tether (which has already fessed up to cooperating with authorities) is now the key connecting tissue between on and offshore systems. BUT - and this is important - unlike all the onshore coins, its redemption policy is utterly mysterious.

12/ Nobody can really tell you who does and doesn't have a right to create or redeem Tethers for dollars. Its redemption policy is arguably incredibly selective and mysterious. But consider this ....

13/ If you're a drug dealer who has been using unregulated stablecoins for evil purposes, would you really want to take Tether to court for failing to redeem your dollar tokens in an El Salvadorian court right now?

14/ Meanwhile, over in the EU, Christine Lagarde has been explicit about her fear that U.S. stablecoins could lure European savings out of the eurosystem. (We used to call this fear of capital outflows.)

15/ She would rather put up a gate, citing the risk that the eurosystem's higher regulatory standards could be "run on" in the event of trouble with external issuers. Unlike the GENIUS, MiCA forces stablecoin issuers to hold as much as 60% of its reserves in its banking system.

16/ Except this really would be replicating the sort of offshore onshore controls that currently exist in China, where the onshore yuan trades at completely different fundamentals to the offshore yuan.

17/ The offshore yuan, meanwhile, benefits from its linkage to the Hong Kong dollar (arguably the biggest dollar stablecoin in the world). The only parties that can trade between the two yuan systems are those approved by Chinese authorities, known loosely as Qualified investors.

18/ If the ECB gets its way, a similar situation would arise for the euro, where only those who meet its rigorous standards (aka achieve equivalence, which is increasingly down to KYC and AML — which we know is also incredibly subjective) get to bridge the two worlds.

19/ For more analysis on why the eurosystem will always struggle to compete in terms of euro-denominated stablecoins (hence why the ECB is stubbornly sticking to a digital euro see the Blind Spot). The clue is in the collateral problem.

SUMMARY 

Both the Eurosystem and the U.S. are trying to subtly rebase the system around a narrower banking model. 

But whereas the EU system is going for a top-down centralized CBDC approach, largely due to its bond market fragmentation issues, the U.S. is going for a bottom-up distributed approach.

Both have extraterritorial ambitions, especially in regions where there is a need for "re-stabilization". 

The outcome is going to be largely the same... APART from the fact that under the digital euro system KYC/AML will be policed by a single authority out of Frankfurt, and the bridges will only be extended to EUROSYSTEM RULE TAKERS. 

And there's an open question about whether its system is really more up to the job of exporting stabilization than the U.S. system.

The U.S. system, on the other hand, will leverage competing big tech systems with varying standards and approaches, but — unlike the EU system — seems far more inclined to allow the dollar to take on a more "neutral" and universal role offshore.

The ongoing strategic ambiguity about whether "anointed" cooperative players like Tether will be able to bridge the two systems with actual dollar redemption capability and backstops, works to that advantage. 

The carrot is fungibility and low transaction fees for regular users who just want to improve local economic conditions. The stick for potential abusers who want to take advantage of light-touch jurisdictions is: "do what you want to do offshore, but you have to face the risk of being banged up in the mega prison in El Salvador if you want to import your illicit proceeds onshore".

In that way, the U.S. is exporting stabilization without demanding rule-taking. 

Pretty Genius, if it works, I'd say. [Again just my analysis.]

P.S. sorry if typos. But I wrote this with my own brain and not Chat Gpt.