Digitising the Mirage:
Stablecoins, Debt, and the Global Exodus from Dollar Dependence
Abstract: The U.S. Congress recently passed the Genius Act, introducing federal regulation for USD-backed stablecoins, marking a pivotal moment in the digital finance era. Marketed as a legislative breakthrough for innovation and transparency, this bill masks a deeper, structural fragility within the U.S. financial system. With national debt surpassing $37 trillion and trust in fiat currencies declining, the Genius Act may accelerate, rather than solve, the systemic crisis. As the U.S. tokenises its fiscal model, Global South nations are mobilising in the opposite direction, shunning dollar dependency through gold accumulation, bilateral currency swaps, and sovereign financial networks. This article explores the unfolding monetary divergence between digitised debt and asset-backed autonomy.
I. Introduction: The Illusion of Stability
In July 2025, the U.S. Congress passed the Genius Act, a landmark piece of legislation that brought USD-backed stablecoins under federal regulation. Celebrated as a triumph of bipartisan cooperation and innovation, the Act was portrayed as a pivotal moment in modern finance, a long-overdue framework for bringing digital assets into the fold of the traditional banking system. President Donald Trump, who had personally championed the bill and maintains sizable investments in crypto-related ventures, heralded it as a "big win for American innovation."
On the surface, the Genius Act represents progress. It offers regulatory clarity in a market previously marked by volatility, fraud, and uncertainty. It seeks to protect consumers, legitimise stablecoins, and prepare the U.S. financial system for a more digital future. But beneath the celebratory headlines lies a far more complex and consequential development: the digital resurrection of a monetary system already straining under the weight of its contradictions.
Stablecoins, even under the most robust regulations, remain fundamentally linked to the U.S. dollar, a fiat currency no longer backed by tangible commodities or sustained by strong industrial output. Its value hinges on global trust and political stability, both of which are eroding. The dollar is increasingly propped up by unsustainable levels of debt, geopolitical leverage, and the inertia of being the world’s reserve currency. In this light, the Genius Act may not signify the revitalisation of U.S. monetary leadership, but rather its digital extension—an attempt to preserve dominance through speed, not substance.
As the United States doubles down on exporting its fiat system in tokenised form, much of the world is heading in the opposite direction. From the gold vaults of Shanghai to the currency swaps of BRICS+ nations, a silent exodus is unfolding. It is not just a rejection of the dollar, but a rejection of the financial architecture built around it. What emerges from this divergence could define the next century of global economic order.
II. Debt as Default: The Real State of the U.S. Economy
As of mid-2025, the U.S. national debt has surpassed $37 trillion, marking a historic high that casts a long shadow over its financial future. According to data from the U.S. Treasury Department, the federal government is now spending over $1.3 trillion annually on interest payments alone, a figure that exceeds the entire defence budget and most discretionary spending programs combined. This unsustainable trajectory reflects not only years of deficit spending but also the rising cost of servicing debt in an environment of higher interest rates.
The structure of the U.S. fiscal system increasingly resembles the mechanics of a Ponzi scheme. The government must issue new debt to pay off old obligations, with little prospect of reducing the principal. Unlike a business investing in productive assets, much of the borrowed capital is directed toward consumption, entitlements, and interest. As economist Richard Duncan noted, “We’re no longer borrowing to grow the economy; we’re borrowing to stay afloat.”
The implications for monetary credibility are profound. Treasury bonds, once considered the safest assets in the world, are beginning to lose their appeal. In early 2025, countries such as China, Russia, and Saudi Arabia further reduced their holdings of U.S. Treasuries, continuing a trend that began a decade earlier. The U.S. now relies more heavily on domestic buyers and the Federal Reserve itself to absorb new issuances, leading to accusations of indirect monetisation of debt.
Meanwhile, the American middle class continues to erode. According to Pew Research Centre, the share of U.S. adults living in middle-income households fell from 61% in 1971 to just under 50% in 2024. Real wages, adjusted for inflation, have stagnated for much of the population. The average American household now faces mounting costs for housing, healthcare, education, and food, with credit card debt reaching over $1.3 trillion nationwide—a record high according to the Federal Reserve Bank of New York.
Asset ownership is increasingly concentrated. Federal Reserve data from Q1 2025 show that the top 10% of households control over 70% of national wealth. Meanwhile, homeownership rates among millennials have dropped below 45%, the lowest on record, as younger generations are priced out of property markets inflated by speculative capital and institutional buying.
The productive economy, measured by manufacturing output, exports, and domestic capital formation, has failed to keep pace with financial asset growth. The U.S. runs persistent trade deficits, and while services exports remain strong, they cannot offset the broader decline in goods production. The result is a growing disconnect between financial instruments and the real economy they are supposed to reflect.
In such a scenario, the digitisation of the U.S. dollar through stablecoins does not address the core issue. It does not enhance productivity, reduce debt, or restore purchasing power. Instead, it facilitates the global dissemination of an increasingly unstable promise. Far from being a remedy, the tokenisation of fiat may serve as a more efficient mechanism for exporting systemic risk.
III. Stablecoins: Solution or Acceleration?
The Genius Act mandates that all stablecoin issuers maintain 1:1 reserves in fiat currency, primarily U.S. dollars or short-term government securities such as Treasury bills. On paper, this requirement addresses one of the biggest concerns in the cryptocurrency sector: the lack of transparency and trust in stablecoin issuers, particularly after scandals like the collapse of TerraUSD in 2022 and the FTX exchange in 2022. These events shook investor confidence and exposed the fragility of loosely regulated digital assets.
Regulatory clarity is undoubtedly a step forward. Stablecoins like Tether (USDT) and USD Coin (USDC) currently serve as the backbone of global crypto markets, facilitating over $100 billion in daily transactions. With the Genius Act, the U.S. government aims to legitimise this sector and attract institutional investors who have so far remained cautious due to compliance uncertainties.
However, the underlying issue remains: these stablecoins are still tethered to a fiat currency that itself is structurally unstable. A tokenised dollar does not escape the fundamental limitations of the dollar. As economist Nouriel Roubini argued in a 2023 essay, “Tokenising fiat does not magically eliminate the fiscal and monetary imbalances underlying the system. It only digitises the symptoms.”
Stablecoins, rather than solving systemic problems, risk accelerating them. By enabling instant, borderless, 24/7 transactions, they increase the velocity of fiat movement without necessarily increasing its underlying value. This could lead to faster capital flight during crises, enhanced volatility in developing economies, and reduced effectiveness of domestic monetary policies. Countries like Nigeria and Argentina have already reported disruptions to local currency control due to the widespread use of USD-pegged stablecoins in black market exchanges and peer-to-peer platforms.
Furthermore, U.S.-backed stablecoins carry geopolitical baggage. They effectively extend the reach of American monetary influence, embedding U.S. regulatory standards into international crypto infrastructure. This creates tensions with nations advocating for monetary sovereignty. For example, Russia and Iran have openly criticised dollar-pegged digital currencies as instruments of surveillance and control, arguing instead for commodity-backed or CBDC-based alternatives.
Even within the U.S., critics question whether stablecoins represent innovation or merely a faster, riskier iteration of an already overleveraged system. Former FDIC Chair Sheila Bair warned in 2024 that “we risk building a financial façade on top of an already fragile monetary foundation. Without structural reform, speed becomes danger.”
In essence, stablecoins do not reinvent the dollar; they repackage it. They inherit its strengths—liquidity, ubiquity, convenience—but also its weaknesses: debt dependence, inflationary risk, and centralised control. By layering digital infrastructure on top of an unreformed fiat core, stablecoins may not offer a solution to monetary instability but rather serve as accelerants in its global propagation.
IV. The Global Response: Exit Strategies and New Alliances
As the United States accelerates the digitisation of the dollar through regulated stablecoins, many countries in the Global South and beyond are charting a different course. These nations, increasingly wary of U.S. financial hegemony and the inherent risks of dollar dependency, are turning to new monetary partnerships, bilateral currency agreements, and alternative store-of-value mechanisms.
The BRICS+ bloc, comprising Brazil, Russia, India, China, South Africa, and recently expanded to include Iran, Egypt, and Argentina, has become a leading force in de-dollarisation efforts. In 2023, BRICS nations settled over 30% of their trade in local currencies, a figure expected to surpass 50% by the end of 2025, according to the Eurasian Economic Union. China and Brazil now conduct the majority of their bilateral trade in yuan and real, bypassing the U.S. dollar entirely. Likewise, India and Russia have adopted a rupee-ruble trade mechanism for key imports, including oil, and are experimenting with blockchain-based settlement platforms to avoid SWIFT and Western intermediaries.
ASEAN nations have also moved toward regional monetary autonomy. Malaysia, Indonesia, Thailand, and Singapore have integrated QR-based payment systems that facilitate local currency transactions across borders. In April 2025, Bank Negara Malaysia announced a partnership with the United Arab Emirates to establish a ringgit-dirham settlement corridor, directly challenging dollar-dominated oil trade. The African Continental Free Trade Area (AfCFTA) is similarly exploring the development of a Pan-African digital payment system to boost intra-African trade and reduce reliance on external currencies.
These moves are more than operational upgrades; they reflect a fundamental strategic realignment. Central banks in Nigeria, Ghana, and South Africa have publicly stated their intentions to reduce dollar reserves and increase holdings in gold, Chinese yuan, and regional currencies. According to the World Gold Council, central bank gold purchases hit a record 1,136 tonnes in 2023, with emerging markets accounting for more than 70% of the total.
In addition to rebalancing reserves, nations are also building independent financial infrastructure. The BRICS bloc has launched “BRICS Pay,” a digital platform designed to facilitate real-time cross-border transactions using local currencies. Though still in early phases, it mirrors China’s Cross-Border Interbank Payment System (CIPS), which was created as a yuan-based alternative to SWIFT. As of 2025, CIPS processes over $300 billion in transactions monthly, with growing participation from Belt and Road Initiative partner countries.
Geopolitical tensions have further accelerated the push away from the dollar. Following the U.S. freezing of over $300 billion in Russian foreign reserves after the Ukraine invasion, many governments began questioning the security of their dollar-denominated assets. Iranian officials have likened dollar dependence to “economic hostage-taking,” and Saudi Arabia has signalled openness to pricing oil in yuan—a previously unthinkable move.
These developments underscore a critical shift: the Global South is no longer content to function as passive nodes within a U.S.-centric financial network. Through strategic alliances, sovereign payment systems, and diversified reserves, these nations are building a parallel monetary architecture—one that seeks to replace dependency with autonomy and dominance with mutuality.
V. Gold’s Resurgence: The Return of Real Assets
As fiat currencies face declining trust and rising debt levels, gold is re-emerging as a cornerstone of monetary strategy, particularly among countries seeking insulation from dollar volatility and Western financial leverage. The resurgence of gold in international finance marks a return to real assets as anchors of sovereign stability and signals a break from the fiat-based financial architecture that has dominated the post-Bretton Woods era.
China has been at the forefront of this movement. In early 2025, China announced the discovery of the Wangu goldfield in Hunan province, estimated to contain over 1,000 tonnes of gold reserves, the largest untapped deposit discovered globally in recent decades. This development aligns with China’s broader gold accumulation strategy. The People’s Bank of China (PBoC) has increased its gold reserves for 18 consecutive months, reaching an official holding of over 2,300 tonnes by mid-2025, according to the World Gold Council. These figures likely understate the true reserves, as China historically acquires gold through non-transparent state channels.
In tandem, China has expanded the global footprint of the Shanghai Gold Exchange (SGE). In June 2025, the SGE launched its first offshore gold vault in Hong Kong, enabling international investors to trade and store gold denominated in yuan. This infrastructure bypasses the traditional London Bullion Market Association (LBMA) and offers a pricing and settlement mechanism that aligns with China’s long-term ambition to establish the yuan as a global reserve currency backed by tangible assets.
Other countries are following suit. Turkey, India, Kazakhstan, and Uzbekistan have significantly increased their gold holdings in the past two years. According to IMF data, central bank gold purchases reached a 50-year high in 2023, with 2024 and 2025 continuing the trend. Much of this accumulation is motivated by a desire to de-risk from dollar holdings, particularly in light of recent geopolitical tensions and the weaponisation of dollar reserves, as witnessed in the freezing of Russian assets.
Notably, gold is also being integrated into trade settlement mechanisms. In April 2025, Russia and Iran began settling part of their bilateral trade using a gold-backed clearing system to avoid dollar exposure. Similarly, West African nations within the ECOWAS bloc have proposed a gold-backed regional currency to stabilise intra-regional trade and shield their economies from forex shocks.
Beyond state-level strategies, private institutions in the Global South are increasingly turning to gold as a hedge against currency depreciation. In Zimbabwe, where hyperinflation has eroded public trust in fiat, the government introduced gold coins and digital tokens backed by bullion to stabilise domestic transactions. These instruments are accepted for tax payments, banking reserves, and commercial contracts, creating a quasi-gold standard in practice.
Taken together, these developments point to a structural rebalancing in global finance. Gold is no longer seen merely as a crisis hedge or inflation buffer; it is being re-integrated as a functional component of monetary systems. As digital finance grows in parallel, the fusion of blockchain-based infrastructure with gold-backed value propositions may define the next phase of financial evolution—one where physical scarcity and digital trust converge to offer an alternative to fiat instability.
VI. The Ponzi Allegory: Is the Dollar Losing Credibility?
A Ponzi scheme, by definition, is a financial arrangement where returns to earlier participants are paid not from profits but from the contributions of new entrants. This model is inherently unsustainable and collapses when inflows fail to meet outflows. While the U.S. dollar is not a Ponzi scheme in the strict legal sense, its current operational logic increasingly mirrors those dynamics.
The U.S. government is now issuing new debt not to fund innovation or productivity, but to service existing obligations. In 2024, the Congressional Budget Office projected that interest payments on the national debt would consume over 14% of federal revenue—a share expected to grow steadily. The Treasury regularly auctions bonds to roll over maturing debt, essentially requiring new buyers to sustain the illusion of solvency. As long as global investors continue to purchase U.S. Treasuries, the system functions. But this dependence on continuous capital inflow is precisely what defines a Ponzi-like fragility.
What distinguishes today’s environment is the shrinking pool of willing foreign buyers. According to U.S. Treasury data from 2023 to 2025, China and Japan—historically the largest foreign holders of U.S. debt—have systematically reduced their Treasury holdings. In their place, the Federal Reserve has stepped in as a major buyer of last resort, a process known as “monetary financing” or, more critically, debt monetisation. This internal circularity raises long-term inflation risks and undermines confidence in the dollar’s independence from political influence.
Credibility also hinges on perception. The global financial community has begun openly questioning the reliability of dollar reserves. After the U.S. froze $300 billion in Russian central bank assets in 2022, countries from Saudi Arabia to India reevaluated the security of holding reserves in dollars. In 2023, the Financial Times reported that more than 40% of surveyed emerging market central banks had begun diversifying away from the dollar in response to sanctions risk.
The challenge extends to the role of stablecoins. Although regulated under the Genius Act, USD-backed stablecoins ultimately inherit the same credibility issues as the fiat dollar. They are merely digital wrappers around a potentially depreciating promise. In times of crisis, the speed and mobility of stablecoins could enable faster capital flight, undermining banking sector stability in both developing and developed nations.
Alternative monetary narratives are gaining traction. Nobel laureate economist Joseph Stiglitz noted in a 2024 IMF panel that the international monetary system’s dependence on a single national currency creates inherent instability. He warned that “a system in which the reserve asset is also the national debt of one country is structurally conflicted.”
In contrast, emerging economies are exploring alternatives grounded in tangible assets or multipolar arrangements. Gold-backed digital currencies, regional payment networks like BRICS Pay, and central bank digital currencies (CBDCs) are not just technological upgrades—they are trust-building mechanisms designed to decouple from the perceived unsustainability of the dollar-based order.
In this broader context, the dollar’s resemblance to a Ponzi structure is not a rhetorical flourish, but a reflection of mounting systemic vulnerability. As confidence wavers and alternatives mature, the global monetary consensus that once underpinned the dollar’s supremacy is beginning to fracture.
VII. The Monetary Fork: Two Diverging Futures
The global financial system is approaching a decisive inflexion point, a fork in the road between two fundamentally different visions of money, trade, and value. On one side lies the U.S.-led model of digitised fiat, where stablecoins backed by uncollateralised debt and centralised institutions seek to extend the life of a system built on trust and inertia. On the other side, a growing coalition of nations is coalescing around an alternative: a multipolar, asset-backed framework anchored in sovereignty, tangible value, and regional collaboration.
The U.S. model emphasises speed, scalability, and institutional authority. The Genius Act formalises stablecoin issuance under federal oversight, embedding dollar-denominated assets in global crypto infrastructure. This approach appeals to financial institutions and fintech innovators who prioritise liquidity, compliance, and integration with existing markets. It builds on the legacy of the petrodollar system and the dollar’s role as the world’s primary reserve currency.
However, critics argue that this system perpetuates fragility. By digitising debt-based money, the U.S. risks scaling up the same vulnerabilities that plague its fiat foundation. Without meaningful fiscal reform or monetary restraint, the expansion of tokenised dollars could fuel speculative bubbles, cross-border imbalances, and capital volatility, especially in emerging markets.
In contrast, the Global South model envisions a financial system grounded in production, resources, and regional autonomy. Gold-backed payment mechanisms, currency swaps, and cross-border settlement platforms like BRICS Pay or CIPS reflect a deliberate pivot toward multipolarity. These frameworks enable countries to trade without relying on the dollar, reduce exposure to sanctions, and manage monetary policy without external interference.
Take, for example, Saudi Arabia’s consideration of pricing oil in yuan, or the Pan-African Payment and Settlement System (PAPSS), which allows for intra-African trade in local currencies. These are not isolated experiments but part of a growing pattern of “exit infrastructure” being developed to sidestep the vulnerabilities of dollar-based finance.
Moreover, many of these alternatives embrace hybrid models that combine digital innovation with asset-backing. Russia and Iran have piloted gold-linked blockchain settlements, while China’s digital yuan is embedded within an ecosystem of real-economy production and export surplus. These designs aim to restore a material basis to monetary exchange, reconnecting currency to commerce and value creation.
The divergence between these two models is not merely technical. It reflects a philosophical divide over what money should represent: a claim on future productivity and real resources, or a political tool sustained by institutional credibility and market dominance. One path seeks to evolve the existing system; the other seeks to replace it.
As these two futures take shape, the global monetary system is being reimagined in real time. The question is not whether the dollar will disappear, but whether it will remain dominant in a world that increasingly values resilience over reach, and substance over scale.
Conclusion: The Reckoning Approaches
The Genius Act, while branded as a milestone in regulatory modernisation, may ultimately serve as a digital life raft for a system already taking on water. Far from signalling a renaissance in U.S. financial leadership, the move to formalise USD-backed stablecoins appears to be a tactical response to declining global confidence in fiat. Tokenising the dollar allows for faster, more frictionless circulation, but it does not resolve the structural contradictions of debt accumulation, eroded purchasing power, and diminished global trust.
Meanwhile, the world is not waiting. Across Asia, Africa, Latin America, and Eurasia, nations are actively building escape routes from dollar dependency. Whether through gold accumulation, bilateral trade agreements, or the establishment of alternative payment systems, these initiatives reflect a coordinated effort to restore monetary sovereignty. As noted by economist Zoltan Pozsar, “We are moving toward Bretton Woods III—a system where commodities, not debt, re-anchor global finance.”
These trends are no longer hypothetical. In March 2025, the African Union officially endorsed PAPSS as a continental settlement system. China’s CIPS processed over $3 trillion in transactions in the first half of the year, while BRICS+ nations held their first summit to discuss launching a shared clearinghouse backed by a basket of commodities. Even Western commentators have begun to acknowledge the shift: a 2024 report by the Bank for International Settlements (BIS) warned that a “fragmented but resilient monetary ecosystem” is emerging beyond the dollar’s orbit.
This reckoning is not just about monetary policy; it is about global alignment. Countries are reassessing what kind of economic future they want to build—and who they are willing to trust to anchor it. As digital tools make alternatives increasingly viable, and as real assets regain importance in the global ledger, the monopolistic era of the dollar may be drawing to a close.
The stablecoin, in this context, is not a solution—it is a symbol. It represents the latest adaptation of a fiat model that relies on confidence without collateral and authority without balance. For some, it will be a bridge. For others, a warning.
In a world where bytes move faster than belief and power is being redefined through production, autonomy, and resilience, only those systems grounded in tangible value and equitable trust will endure. The future of money is no longer singular. It is being reshaped by those who have long been at its periphery, but who are now writing its next chapter.
About the Author
Farhad Omar is a geopolitical analyst and technology strategist with a focus on Islamic finance, decentralised systems, and economic transformation in the Global South. With a background in economics and cybersecurity, he writes at the intersection of monetary policy, digital innovation, and socio-political realignment. Farhad is the founder of Farhad Omar Studios and hosts the podcast series Reflections in Faith.