CoinDesk columnist Nic Carter is partner at Castle Island Ventures, a public blockchain-focused venture fund based in Cambridge, Mass. He is also the cofounder of Coin Metrics, a blockchain analytics startup. Stablecoins are a hot commodity. Over $16 billion of them circulate in the wild today, up from $4.8 billion to start the year. Mostly these are issued outside of the U.S., and so are largely unaccountable to financial regulators. If they keep growing, U.S. policymakers, in particular those in the state of New York, will have to stomach the loss of their dominance over dollar clearing. But because stablecoins represent a powerful neutral financial infrastructure, the U.S. should welcome their ascendance regardless. It’s no secret that banking is highly politicized, often in informal or hard to apprehend ways. The overt politicization of the N.Y.-based correspondent banking system represents a tax on all users. Embedded in each transaction is a slight risk of censorship. Dependence on the system means submitting oneself to an American aegis. The harder it is to extricate yourself, the more you are subject to the demands of the administrator. See also: Alejandro Machado – Venezuelans Look to Crypto-Dollars for Financial Security Banks and payment processors have also become more politicized, as they have begun to “de-risk” (read: de-platform) individuals and industry sectors with whom they disagree politically, or where they consider implied compliance costs too significant to be worth the hassle. In February, I wrote that U.S. regulators should embrace the potential of stablecoins as continued instruments of dollar dominance. I stressed the potential welfare benefits of allowing savers in countries with inflationary regimes to engage with currency substitution without relying on the bank sector. Since February, the outstanding supply of stablecoins has grown from around $5.5 billion to $16 billion and their daily settled value has grown from about $1 billion daily to $4 billion daily. This phenomenon is no longer localized to the crypto industry. It has begun to cause geopolitical reverberations. First, stablecoins make for an excellent tool to avoid capital controls in oppressive monetary regimes. Chainalysis has reported that tether (USDT) is extremely popular in China, even recently exceeding bitcoin’s (BTC) usage in the region. It’s important to understand that the popularity of stablecoins or “crypto-dollars” is not solely due to their digital nature but because of the transactional freedom that they offer to users. POLICYMAKERS SHOULD BE THANKING THEIR LUCKY STARS THAT A PUTATIVE SUCCESSOR TO THE U.S.' FINANCIAL INFRASTRUCTURE IS A LARGELY AMERICAN PHENOMENON. >"The U.S. has much to gain from being the steward of a politically neutral payments technology, even if it means giving up power over the financial system."