The Digital Eurodollar
Why expanding access to dollar accounts is a national security asset
Stablecoins are the most powerful tool the United States of America has to defend the dollar, yet we’re not treating them that way.
I started Infinite because stablecoins are rewiring global banking: faster, global, programmable dollar settlement, and in my view, this is the eurodollar of the future.
It probably doesn’t help my objectivity that I’ve spent almost a decade on the least romantic problem in global payments, proving that people, businesses, and eventually agents are who they say they are. I had a front-row seat to the launch of USDC and new network support at Coinbase, as well as at Sardine, where I helped lead the risk platform focused on compliance for at-scale fintechs and financial institutions. I quickly learned that as money movement shifts to faster rails, increasing customer expectations for onboarding and settlement times, the trust problem becomes increasingly challenging.
Stablecoins make dollars move the way the internet moves information: instantly, globally, around the clock, and are programmable in ways a Fedwire, SWIFT, or check transfer will ever be.
Here’s the mission behind Infinite: expand access to the dollar for businesses and individuals who have never had it, leveraging stablecoin-native rails and AI-native global compliance. That access is also a national security asset, not merely a fintech capability, and the one thing that turns it from a liability into an asset is compliance.
Morgan Beller made a version of this case in 2024, in an essay called “Stablecoins Are Defense Tech.” She was right and called it first, and her framing stuck with me because for a century, the US spread the dollar through a push, through treaties and institutions, while the digital dollar spreads through a bottom-up approach, because ordinary people and businesses need it.
Every time a business in Brazil or Mexico opens an app and buys a dollar-backed stablecoin, they do something no US ambassador or treaty could ever make happen: they choose the digital eurodollar and the US treasuries backing it. There’s no diplomat in the room, no campaign, no incentive; rather, a stablecoin is simply the best option available at that moment, and they reach for it with their own money. And they’re not alone: around 99% of stablecoins are pegged to the dollar, with roughly $320 billion in circulation, and trillions of dollars cross these rails every year, almost none of it touching a US bank.
The old model is breaking down
For most of the last century, the dollar won through state machinery: Bretton Woods, central bank swap lines, the correspondent banking network that runs on SWIFT. That worked as long as governments stayed aligned with the US, and that alignment is fraying. In 2024, for the first time, foreign private investors held more US debt than foreign governments and central banks did. Japan and China, long the two anchor holders, have fallen from more than 40% of all foreign-held Treasuries in 2011 to roughly a quarter today. As Circle’s Jeremy Allaire has pointed out in Congressional testimony, the dollar’s share of global reserves has been slipping by about a percentage point per year for nearly a decade.
We share the view that another treaty won’t fix this, and instead it will be a digital eurodollar network: verified, trusted businesses and people around the world who can safely reach the dollar, playing the role SWIFT played for banks, except that it is open to everyone building on the new rails, in any currency, fiat or digital.
Bottom-up dollarization
Access to the dollar used to be a privilege gated by which bank would take you and which country you were born in, and stablecoins turned it into a utility available to anyone with internet access.
An Argentine restaurant owner no longer needs her central bank’s permission to convert the day’s cash into dollars at midnight, thereby allowing her to manage foreign exchange risk. When the peso collapsed, this happened on a national scale, and in Nigeria, tight currency controls make stablecoins the only practical way for some importers to pay their suppliers.
Nobody negotiated any of this, and it only required the dollar to be the best option for an ordinary person with a phone. You can sanction a government, but you cannot sanction a preference held by millions of people who all independently arrived at the same conclusion.
A digital eurodollar
There’s a precedent for this: in the 1950s and 60s, an enormous market grew up in dollars held outside the United States, in banks in London and across Europe. They were called eurodollars, and they sat beyond the direct reach of US banking regulation, and for a while, Washington barely paid attention. But the eurodollar market didn’t weaken the dollar; rather, it entrenched our position in global markets. It put dollars in the hands of people and companies all over the world who would never open a US bank account, and it made the dollar the default currency and denominator of global trade.
Stablecoins are the digital eurodollar, dollars that live outside the US banking system, except now they’re available to anyone with the internet rather than only to banks and multinationals, and programmable in a way paper dollars and wire transfers never were. The eurodollar is proof that offshore dollars, done right, extend American power rather than drain it.
There’s one difference, and it’s the whole point of this essay: the analog eurodollar market was almost impossible for the US to see, let alone police. The digital one doesn’t have to be, and we believe the winning network will allow compliance to travel with the token.
Why Americans should care
Under the GENIUS Act, a compliant stablecoin issuer must back every token one-to-one with safe assets, which, in practice, means short-dated US Treasuries. So every dollar of compliant stablecoin in circulation is a dollar of new demand for US government debt.
That demand is already enormous, with Tether alone now holding more US Treasuries than Germany does, and Tether and Circle together hold well over $180 billion of them. Standard Chartered projects that compliant issuers could generate between $800 billion and $1 trillion in fresh demand for Treasury bills by 2028, against roughly $1.3 trillion in net new bill supply the Treasury is expected to issue over that window. Read that again. Stablecoin issuers alone are on track to absorb the majority of the government’s new short-term borrowing, enough that Treasury could suspend 30-year bond auctions for three years. Treasury Secretary Scott Bessent has called stablecoins potentially “an important feature of financing the U.S. government.”
If you’re an investor, this is the part worth sitting with. This tailwind is not sentiment; it is a statute. Every new user of a compliant stablecoin is, mechanically, a small buyer of US debt.
Compliance is a national security asset
The obvious objection is that stablecoins make it easier to evade sanctions, which has historically been true, but the same law that turns stablecoins into Treasury buyers can also extend the US sanctions regime into software if the system is built for it.
Here’s what most people get wrong about sanctions: they assume they run on SWIFT and that SWIFT enforces them, when in fact SWIFT is merely a messaging standard. The enforcement stems from the fact that every bank on it operates within the US compliance regime, follows the Bank Secrecy Act and OFAC rules, and loses its license and access to dollars if it doesn’t. The enforcement was never on the SWIFT. It’s always been the institution’s compliance obligation, and it’s historically been slow, manual, and full of gaps.
Stablecoins don’t have to inherit those limits, as compliance and settlement can happen in software, in real time, screening and blocking at the user experience layer instead of through days of human review across a chain of correspondent banks.
“If stablecoins are instant or near instant, then your limiting factor now becomes compliance.” – Nikhil Srinivasan in a PitchBook stablecoin report.
This past April, FinCEN and OFAC proposed the first rule in US history to require a category of US persons, stablecoin issuers, to maintain a formal sanctions compliance program, with the technical ability to freeze, block, and burn tokens on a lawful order. That same month, Tether coordinated with OFAC to freeze $344 million in stablecoins tied to the Central Bank of Iran, the largest on-chain freeze of sovereign reserves ever recorded. Try executing a freeze like that through correspondent banking; you can’t, at least not at that speed or with that finality.
The enablement layer is where this gets decided
An import-export platform or payment processor that pays contractors in a dozen countries doesn’t integrate Tether directly and has no interest in becoming a compliance company. The moment you touch dollar flows, you’re suddenly expected to be a global KYC, KYB, and AML expert, none of which are core to the product.
The enablement layer is where the entire dollar stack that touches the real global economy collapses full stack into an embedded experience, and it’s necessary to create an end-to-end compliance network.
This is the layer almost nobody talks about: issuance is just one slice of the stablecoin economy, and between the stablecoin issuer and the businesses and individuals who are actually using them lies a ton of payment-processing complexity. This includes verifying global businesses and individuals, screening for sanctions, monitoring transactions, liquidity to convert from fiat to stablecoin and back, maintaining banking relationships that accommodate the flow, and filing reports, pretty much anything a traditional bank would need to do, except now at a global scale.
Why are stablecoins bottom-up defense tech
Most policy attention has gone to issuer-level rules like the GENIUS Act. That’s a good first step, but issuers aren’t where compliance meets the merchant developers, businesses, and end users.
The dollar is the greatest product America has ever shipped. Now the rails beneath it are being rebuilt, and they should be built here, inside American law, by people who want America to win.
The 21st-century dollar is here, mostly thanks to people who didn’t set out thinking of themselves as doing national security work, and I think that’s exactly what makes this space so special. 🇺🇸 🌐
This post was originally published and permalinked at nvs.xyz.