Stablecoins are the shiny new object on Wall Street. Once restricted to the niche world of crypto trading, stablecoins entered the mainstream of U.S. finance as Congress debated—and ultimately passed in July—a bill to legitimize them and expand their use. That has spurred a hype cycle as banks and Fortune 500 companies rush to explore the technology.
Stablecoins, which are typically pegged to the U.S. dollar and backed 1:1 to a pool of reserves, have been around for a decade. But their soaring popularity has brought mounting questions over how their growth could impact the broader economy. Financial experts and government officials alike are grappling with the implications of giant stablecoin issuers Tether and Circle becoming some of the largest holders of U.S. Treasuries, rivaling countries like South Korea and Saudi Arabia.
While crypto proponents argue that stablecoins will help extend dollar dominance across the…
