"Bitcoin and stablecoins are complementary"…Seen as a tool to reinforce dollar hegemony

An analysis finds that Bitcoin (BTC) and dollar-based stablecoins form a mutually complementary relationship and are working in favor of the U.S. dollar system.

According to Cointelegraph on the 5th (local time), Sam Lyman, head of research at the Bitcoin Policy Institute (BPI), said, "Bitcoin’s main trading pairs are BTC/USD or dollar-pegged stablecoins such as Tether (USDT)," adding that "Bitcoin and the dollar system have a mutually reinforcing relationship."

He explained that, contrary to the prevailing view that Bitcoin would weaken dollar hegemony, this structure instead expands demand for dollars. In particular, he argued that, much like the ‘petrodollar’ system in which international crude oil trades are settled in dollars, Bitcoin transactions are likewise conducted on a dollar basis, generating dollar demand.

Lyman stressed the importance of the U.S. putting a stablecoin regulatory framework in place. He said that advancing policy based on existing regulatory frameworks, including the GENIUS Act, could help sustain dollar hegemony and bolster global competitiveness.

Meanwhile, he pointed out that China has repeatedly banned Bitcoin and stablecoins to maintain capital controls. He explained, "China’s economy depends heavily on capital controls, and it views virtual assets (cryptocurrencies) as a threat in order to prevent capital outflows."

China is instead pushing the digital yuan, a central bank digital currency (CBDC). The analysis says the system is structured to be controllable by the government, aiming to manage capital flows and expand influence over foreign-exchange markets.

Still, despite such regulations, actual crypto activity appears to be continuing. Even after China’s mining ban, Chinese-affiliated mining pools were tallied as accounting for more than 36% of the total hashrate.