The Market

Since the beginning of 2025, it has been a great time to invest in foreign currency sovereign bonds on a total return basis. In this time period, the US dollar has declined a little under 9% and many foreign interest rates have been higher than US dollar rates. However, if the US dollar were to strengthen, the benefits of the yield pick-up in foreign currencies will deteriorate. A rising dollar reduces the yield advantage of foreign currency investing in total return terms.

As example Etherfuse’s Brazilian short-term sovereign bonds have an APY of 13.06%. The US treasury Etherfuse short-term bonds have an APY of 3.91%. A dollar investor going to Brazilian Tesouros gets a yield pick-up or carry of 9% versus the US dollar. If the US dollar appreciates less then 9% in value versus the Brazilian real, the trade is profitable.

When tariffs were announced on April 1st the US dollar went up. Since that time, foreign currencies have recovered and yield pick-up trades have done well.

When tariffs were confirmed on July 31st and implemented on August 1st, the currency movements were interesting. On July 31st foreign currencies declined and the US dollar rose, but they all bounced off the lows by the end of the day. Some like the Mexican peso were unchanged. Dollar strength did not hold.

On August 1st, tariff implementation day, foreign currencies went up. The Euro appreciated more than 1%, the Brazilian real appreciated .74%, and the peso was unchanged.

Tariff implementation should boost the US dollar value. US tariffs slow exports to the US, and lower exports to the US reduce economic growth in foreign countries. To counter the impact of lower economic growth, Central banks lower interest rates, making the yield on their bonds less attractive, which normally causes their currencies to go down in value versus the US dollar.

But on August 1st the day tariffs were implemented, the US dollar declined; the dollar index (DXY) went down 1.18% and the Euro rose 1.37% .

The US dollar move can be explained by the US labor reports, which showed labor market weakness; US job growth cooled in the past three months, and the unemployment rate rose. Given labor market weakness, investors now believe the US Fed will lower interest rates in September, which would put downward pressure on the value of the US dollar.

The key question is- will one month of US labor weakness lead the US Fed to begin an aggressive campaign of lowering interest rates in September? If they lower interest rates aggressively, the US dollar will go down, benefiting yield pick-up trades of bonds in foreign currencies.

Although there may be a cut in September, it is hard to imagine a large cut, or a signaling that more cuts are coming. The impact of tariffs on inflation is not yet known. In the end, rates not going down as fast as anticipated could keep the US dollar stable or allow for mild appreciation.

Given the potential a slower than expected rate cutting program, it is best to seek trades with the biggest yield pick-up, or currencies with low chances of depreciation against the US dollar. Brazil and Mexico fit this bill. The yield pick-up in Brazil is 9%, which means things must really change for the US dollar to go up 9% and wipe out the yield differential. The Mexican peso has shown its mettle by holding value in a tumultuous time, and the Mexican government seems to be in a good place with the US, unlike many other countries.

In conclusion, a portfolio composed of Etherfuse Tesouros and Mexican Cetes should perform well versus US treasuries until more is known on interest rates and tariffs.

This blog is for educational and informational purposes only, covering general market trends, industry developments, and asset features. Nothing herein is investment advice, a solicitation, or a recommendation to buy or sell any assets. Etherfuse and its guests may hold stakes in some or all of the assets discussed.

Well, President Trump followed through on his highly emotional threat and raised tariffs on Brazil to 50%. He did this citing “an unusual and extraordinary threat” . This extraordinary threat is the domestic trial of ex-President Jair Bolsonaro, an issue that is purely a Brazilian matter, no business of the US.

It is hard to see how a trial of an ex-President is “an extraordinary threat”. Brazil does not share a border. There is no risk of an immigrant crisis. Civil war is not about to break out.

In the end the tariffs seem to be a big “Nothing Burger”. Many sectors are exempt. The stock market went up 1% post announcement. The Brazilian Real weakened .18%, which is basically a rounding error. And the Brazilian ten-year bond was unchanged.

It is important to mention the moves in bonds, stocks, and the currency. They are the great sources of interpretation as to how these tariffs will impact Brazil in the future. Spoken opinions and sound bites do not communicate the impact as well as numbers, markets.

The muted reactions are surprising. Normally such tariffs would have sent the currency on a downward path. The stock and bond markets would have cratered in price terms.

Given the whimper as opposed to bang of US tariffs on Brazil, it makes sense to reiterate the trade favoring Brazilan Etherfuse Tesouros versus the US bonds and currency. The news is out, and the price reaction was minimal.

To re-cap, the Etherfuse Brazilian Tesouro yields 13.06% and the US yields about 4.34%, an 8.72% yield pick-up, a good carry trade.

In a yield pick up trade the goal is for nothing to change in the currency or interest rates. You want the situation to carry on as it is. If a 50% tariff doesn’t cause change in the currency or interest rates, it is hard to imagine what will.

This blog is for educational and informational purposes only, covering general market trends, industry developments, and asset features. Nothing herein is investment advice, a solicitation, or a recommendation to buy or sell any assets. Etherfuse and its guests may hold stakes in some or all of the assets discussed.

A weak US dollar in the first six months of 2025 has been a boon for foreign currency denominated assets. By the end of June, the US dollar had gone down about 9% (as measured by DXY), and yields on many foreign bonds stayed high. Investors avoiding exposure to the US dollar did well.

But, as of July the situation may have changed. Since the beginning of July, the currencies of Etherfuse’s stable bonds have mostly declined against the US dollar: The UK pound was the worst at -3.42%, the Brazilian Real -2.62%, the Euro -2.45%, and the Mexican peso unchanged. The dollar index, DXY was up 2.76%

This begs the question: Is the strategy of investing in foreign stable bonds for a yield pick-up over? Put another way, has the value of the US dollar versus foreign currencies bottomed? Is it onwards and upwards for the US dollar from here?

If an investor believes the US dollar is going to strengthen, they may want to stop chasing yields in countries like Mexico and Brazil, and back off forex exposure in the Euro and the UK pound.

The issues that pressured the US dollar are well known. Inconsistent policy surrounding tariffs, rising US debt, concerns over inflation from tariffs to name a few. More concerning long-term is the fact that there is a growing trend for foreign companies that buy goods from the US asking to be paid in their local currency, because they do not want to own the US dollar. For example, a lumber company in the Midwest now converts US cash into Euros before paying for hardwood imports from Europe; they get a 2% discount for paying in Euros. For the US dollar to appreciate investors all over the world must have confidence in the US economic fundamentals. As of now, confidence does not seem apparent.

As we come closer to August 1, one of the days President Trump said tariffs would be levied, foreign currencies have weakened. The big move was on the day the trade deal with Europe was struck. In the wake of that deal being announced, the DXY went up 1%.

The US dollar’s upward move in July may be a relief rally driven by tariffs that are not as severe as initially thought, more bark than bite. But just because the tariff outcome result was not as bad as anticipated does not mean the currency is going to make a sustainable move upwards. Relief rallies are not trend reversals.

There are a couple of ideas holding dollar appreciation back, even if tariffs are not as bad as expected.

First, the US does not want the US dollar to strengthen. A stronger US dollar makes exports more expensive and imports cheaper. In this scenario, imports would grow faster than exports and make the trade deficit worse.

Second, debt is still a problem. The US debt is reaching its ceiling. Yes, President Trump is pressuring Chairman Powell to lower interest rates, and if that happens the amount of interest the US pays on its debt will go down. But this is just kicking the can down the road. Until congress increases the debt ceiling, debt will continue to be a problem, a problem that could derail the US dollar

Third, although there is clarity on tariffs, no one knows what the impact on inflation will be. Until this is clear, the US dollar will have a hard time appreciating.

So, what currencies still make sense to buy versus the US dollar if the US dollar stays the same or weakens.

The Mexican peso may be at the top of the list. The Etherfuse CETES has an APY of 6.51% and the currency barely moved in July. A 4 plus percent pick-up in yield versus the US dollar with currency stability makes sense.

The Brazilian Real bonds might be a good choice. The Etherfuse Tesouro has an APY of 13.06%. which is 8.7% more than US dollar short-term yields. There is concern that the US will place a 50% tariff on Brazil, but if they do not, Etherfuse Tesouros will be a hit.

Probably best to hold off on exposure to the Euro and UK right now because the yields are low

In conclusion a portfolio of 60% CETES and 40% Tesouros seems to make sense for investing or staking or whatever you want to do with it.

This blog is for educational and informational purposes only, covering general market trends, industry developments, and asset features. Nothing herein is investment advice, a solicitation, or a recommendation to buy or sell any assets. Etherfuse and its guests may hold stakes in some or all of the assets discussed.

Well, Brazil responded to President Trump’s threat of 50% tariffs, if they do not stop the “Witch Hunt” against Jair Bolsonaro, the ex-President who allegedly initiated a coup against the present government. Both the President and the Supreme Court pushed back. The Supreme Court’s opinion was unanimous.

If we look at the situation rationally, pushing back may reflect a Brazilian position of strength. First, the US has a trade surplus with Brazil (US sells more dollar value to Brazil than Brazil sells dollar value to America). Sanctions would harm this balance by cutting back on US sales to Brazil. The whole point of tariffs is that other nations are ripping the US off, as determined by a trade surplus with the US. If the US has a surplus with Brazil, is the US ripping Brazil off? Second Brazil is united against the US and President Trump’s threat; in a Brazilian poll, 50.3% of respondents view Trump’s move as an attack on Brazil’s sovereignty. When asked should Brazil retaliate with tariffs if the US applies them, 51.8% of Brazilians said they should hit back. 61% of poll respondents said Trump’s decision to target Brazil is unjustified

Without knowing it, President Trump may have given a gift to President Lula; Lula’s approval rating went from 47% to 49%.

So, the Brazil public is digging their heels in, steeling for a fight, the Supreme Court has weighed in, and public consensus is for retaliation.

What does this mean for investing in Brazilian stable bonds or the currency?

Well, quite a bit. On the day President Trump threatened tariffs regarding the treatment of Jair Bolsonaro, the Brazilian Real weakened 2% to a level of 5.57. This is where the currency is now. The first knee-jerk reaction of weakness was the only one.

This makes Brazilian tokenized bonds, like the short-term Tesouros offered by Etherfuse very attractive when compared to short term US bonds. Etherfuse Tesouro yields 13.06%, and short-term Etherfuse US bonds yield 3.93%. Thus, the yield pick-up from owning Brazilian bonds is 9%. Even if the US dollar fiat-based short-term bond is used, the yield pick-up is 8.75%.

Thus, Tesouros offer a great yield when compared to US dollar yields. That said, this risk as always is that the US dollar appreciates significantly and wipes out the yield differential. For this to happen the US dollar would have to go up almost 9% versus the Brazilian Real, to a level of over 6 Real to the USD. The last time the Brazilian Real reached the 6 level was in April when the first round of US tariffs was announced. That was a bad time for all foreign currencies, and probably the worst levels, given that US tariffs have not had a harsh impact on currencies.

The Brazilian currency may weaken from here as the fight with the US heats up, but 9% is a stretch.

The key to this trade is whether President Trump follows through on the threat of 50% tariffs, tariffs that are more driven by emotion then economics. If the tariffs come out, Brazil will probably hit back with something harsh. It could get ugly for no economic reason whatsoever.

But, ugly or not, a 9% yield pick-up versus US dollars seems a good bet.

This blog is for educational and informational purposes only, covering general market trends, industry developments, and asset features. Nothing herein is investment advice, a solicitation, or a recommendation to buy or sell any assets. Etherfuse and its guests may hold stakes in some or all of the assets discussed.

Sometimes things come along that are too good to be true. Presently, Brazilian tokenized Tesouros for investing in and lending on chain may be one of those opportunities.

When US tariffs were announced in April, the Brazilian currency, the real, weakened to its 2025 lowest value versus the US dollar. From this low point, given President Trump’s Taco behavior, the currency strengthened 7% to its present level of 5.58 Real to USD.

In the last few days it has weakened a bit, 3.37%, due to President Trump’s rhetoric regarding tariffs on Brazil. President Trump threatened Brazil with a 50% tariff. President Trump’s motivation to do this expresses a desire to meddle in Brazilian internal affairs. The stated rationale behind the tariffs is based on former President Bolsonaro’s trial, which President Trump called a “Witch Hunt”, for all sorts of bad things Bolsonaro allegedly did.

We must ask the question, what does a far-right buddy of President Trump have to do with US and Brazil tariff policy? In April Brazil was not one of the countries targeted by higher so-called reciprocal tariffs. They were exempt because the US has a trade surplus with Brazil; the US exports more to Brazil than Brazil exports to the US. A tit-for-tat tariff war could lead to a lower US trade surplus with Brazil, which is contrary to the goal of tariffs.

Sadly, President Trump’s policies seem to be rooted more in emotion than economics.

But there may be another reason for an aggressive tariff program towards Brazil. BRICS, a grouping of nations that includes Brazil, Russia, India, China, and South Africa held a meeting where they took a subtle swipe at President Trump’s policies saying they “voice serious concerns about the risk of unilateral tariff and non-tariff measures that distort trade”.

They did not mention the US or President Trump by name, but President Trump took it personally. And guess where the meeting that made this statement was held? Brazil.

In short, the threat of exorbitant tariffs on Brazil, a country the US has a trade surplus with, does not seem rational. Tariffs are designed for countries where the US has big deficits like China and Europe. The impact on US finances from high tariffs on Brazil will be negligible.

So, back to the markets. Let’s assume that President Trump’s threat is merely a “Taco Grande”. If that is the case, Brazilian tokenized bonds may make sense for investing and lending.

First, the currency weakened by about 4% from the date when BRICS made their statement and President Trump rose to the aid of Bolsonaro, but it is still higher in value than April of 2025.

The Etherfuse tokenized Brazilian Tesouro has an APY of 13%. Lending out on a crypto exchange can generate a return over 25% from the combination of owning the yield and getting paid for the lending to other crypto natives.

The risk to this action is that the Brazilian Real weakens significantly against the US dollar, or US dollar stable. A weaker Real (strong dollar) will reduce the overall return if the trade is taken back into US dollar stable.

But Brazilian real weakness would have to be very severe to negate the yield pick-up of the Tesouro versus the US dollar, about 9-10%, combined with the high rate that can be earned by lending the Real. A weakening of the real versus the US dollar of over 20% seems hard to imagine. That would be a crash, and there is no reason for a crash.

So, if President Trump’s threat to Brazil turns out to be a “Taco Grande”, the Brazilian real should hold its value against US dollar stable. Combing this with a high yield and loan rate seems to make sense.

This blog is for educational and informational purposes only, covering general market trends, industry developments, and asset features. Nothing herein is investment advice, a solicitation, or a recommendation to buy or sell any assets. Etherfuse and its guests may hold stakes in some or all of the assets discussed.

90% of all stable coins being US dollar denominated is scary; 90% is too much concentration in any asset class. It is not safe or efficient. Remember, a high concentration of US dollar stable coins is a risk to both the actual stable coin and the US treasury market that backs it; if there were a run on the US dollar stable, treasuries would be sold, interest rates would go up, and rates could spiral out of control.

It is easy to criticize such a ridiculous number, but what is the right number? Given the US is the biggest reserve currency in the world, and that it has been for years since Bretton Woods, a case can be made for dollar stablecoins being the highest percentage in the overall mix.

But 90%? Even for the “King” of Reserve currencies this is too big. After all, the US dollar is only 58% of total global foreign reserves.

Yes, there are other reserve currencies. The Australian dollar, British pound, Canadian dollar, Chinese renminbi, Euro, and Yen are official reserve currencies. A reserve currency is any currency countries hold to pay for future imports or other services. The US dollar is huge in the mix because commodities like oil and wheat futures are priced in US dollars.

Given there are other alternatives for reserve currencies aside from the US dollar, 58% of total reserve currencies does not seem to be carved in stone. If 58% of the US dollar as a reserve currency is not carved in stone, 90% share of US dollar stablecoin is surely questionable.

But how can we bring the 58% and 90% closer together, to assemble some sort of rationality? Well, if we split the middle we come up with 75% US dollar stable coin in the stablecoin mix.

Getting to 75% will not be a result of reducing the growth of the US dollar stable. Rather it will be done by the percentage of other stable coins growing equal to US dollar stable, or faster. The other reserve currencies like the Euro, UK pound, Yen, Canadian dollar, and Australian dollar all deserve a place in the stable coin mix.

From a regulatory perspective, this can be done by allowing all stable coins to trade on a global platform. After all, a big draw of crypto is its ability to transcend boundaries. Imagine a place where someone can buy Australian stable directly to pay for Australian imports. Right now, since most trade is done in US dollars, the money must go from the local currency to the dollar. After the goods are paid for, the dollars must be transferred into local currency to pay the bills, or kept in US dollars for future transactions.

This is not efficient. It would be better if the Australian importer could buy stable in the exporter’s currency directly. It is all is less costly, and crypto allows this.

The downside to this is that some markets may not be big enough to create their own stable coin to trade internationally right now. But the Euro, yen, Canadian dollar, UK gilt, and Australian dollar are big enough to have some representation in the stablecoin mix that is bigger than 10%. After all, they are reserve currencies too, accounting for about 40% of reserves.

This blog is for educational and informational purposes only, covering general market trends, industry developments, and asset features. Nothing herein is investment advice, a solicitation, or a recommendation to buy or sell any assets. Etherfuse and its guests may hold stakes in some or all of the assets discussed.

Let’s get to the point: does the world want to perpetually depend on a reserve currency backed by bonds issued by a government that has chaotic policy, a debt level rising too well over GDP, a commercial system that needs tariffs to compete worldwide, a 30 year long bond that is losing its allure, and a currency that is down over 9% year to date versus other major currencies?

These are not the metrics of a solid currency. But they are metrics of the US dollar. They are also the underlying metrics of the stablecoin market worldwide, as the US dollar represents over 90% of all stablecoins.

The dominance of the US dollar stable in the percentage of overall stablecoins will only get worse. When this happens countries and regions risk suffering economically at the hands of the US. If something goes wrong in the US bond market or economy, the reputations of crypto and stablecoins will suffer. Countries who depend on and put their trust in the US dollar will have serious problems. If a crisis hits, people in countries that have dollarized in crypto will ask governments “why did you do that?”

Bank of England Governor Andrew Baily said the rise of stablecoins risks undermining the public’s trust in money. Governor Baily’s comments reference US dollar stablecoins, because US dollar stablecoins are 90% of the market. They run the risk of undermining the global public’s trust in money.

The problem is not only the concentration of US dollar stable, but the speed at which it is growing. Since the Genius Act passed there have been significant developments around investing and financing in the crypto stable space. A group of tech billionaires have filed to open a new US bank that focuses on startups and cryptocurrency companies. They state their mission is to serve businesses other banks won’t take on.

They will be lending money to crypto companies, which are in essence US dollar stablecoin companies, which in turn will increase the concentration of crypto in all stable. It’s like putting gasoline on a fire.

In the end, US regulation will drive money into US dollar stablecoins, which will increase the demand for US Treasuries, which are the backing for stablecoins. US bond rates may go down, which would allow the US government to borrow more money at a lower rate, or refinance existing debt. This could lead to the US debt level going up to levels normally seen in emerging markets twenty years ago, not the number one reserve currency country.

For now, everybody will go merrily along the US dollar stablecoin path, embracing denial until something bad happens. And the odds are that sometime something bad will happen.

The solution is easy. Create regulation that allows treasury operations, institutional investors, banks, and private investors to hold a diversified portfolio of stablecoins. Presently, in the US stable securities are considered unregistered securities, so this cannot easily happen.

Hopefully the US government will realize that too much into one asset is a risk, especially when the underlying conditions are less than optimal.

This blog is for educational and informational purposes only, covering general market trends, industry developments, and asset features. Nothing herein is investment advice, a solicitation, or a recommendation to buy or sell any assets. Etherfuse and its guests may hold stakes in some or all of the assets discussed.

The Genius Act passed the Senate and got a lot of people clapping hands and “high fiving”. Yes, this is a great piece of legislation for crypto and the future of finance. But some of the comments are off the mark, a bit concerning,

Secretary Bessent was ecstatic that there will be more demand for US Treasuries. US dollar stable, as per the Genius Act, must be backed 1 to 1 by US treasuries. Thus, the more demand for US dollar stablecoins, the more demand for US treasuries.

Further to this idea, an analyst predicted “stablecoin issuers will be the largest holders of US Treasuries in the world in years to come”.

Right now, the largest holders of US treasuries are sovereign nations, with Japan and China being the biggest, because US treasuries are used to manage their dollar reserves.

But there is a risk that demand from central banks to hold US dollar reserves is declining. The OMFIF-Official Monetary and Financials Institutions Forum released a report that says one in three central banks managing a total of $5 trillion US dollars, plan to increase exposure to gold over the next one to two years. Gold will substitute for the US dollar in terms of reserve management.

A survey of 75 central banks was carried out between March and May. The survey asked where central banks are looking to increase currency holdings over the next twelve to twenty-four months. The Euro was number one and the Renminbi was number two. The dollar ranked behind the Yen, Australian dollar, Canadian dollar, and UK sterling. In this survey, on a 12–24-month basis, central banks don’t like the US dollar.

Dollar optimists, like Secretary Bessent, would say a decline in demand from central banks is no big deal. Stablecoin issuers will buy US treasuries to back the coins. Stablecoin buyers will fill the demand lost from central banks.

Substituting solid, long-term reserve-oriented buyers with US stablecoin buyers may not be a good thing. Central banks move in and out of reserves slowly; stable coins are held by commercial and retail interests and are more transactional in nature. It is not a stretch to say that the holding period for stable coin may not be as long-term as demand from central banks for reserve holdings. If the holding period of stable coins is short, there might be more frequent selling pressure on US treasuries.

If there were some sort of crisis of confidence in the US dollar, the selling of US dollar stablecoin may be more aggressive, volatile than sovereign reserve selling. If stable coins really do become the largest owner of treasuries, and there is a crisis of confidence in the US dollar, we have a problem.

There is a solution. If you are going to have stablecoins, let there more than just US dollars. There should be yen, euro, peso, UK gilt and others. In this case, if there is rising concern regarding the US dollar or US treasuries, the holder of the stablecoin can merely trade USDC for another stable coin. The US treasury collateral does not have to be sold. If the US treasury collateral does not have to be sold, there will be less pressure on the US treasury market.

The Genius Act is a great first step. But if it leads to a shift in the demand composition for US treasuries from longer-term to short-term holders, volatility will increase and there may be financial pain ahead.

This blog is for educational and informational purposes only, covering general market trends, industry developments, and asset features. Nothing herein is investment advice, a solicitation, or a recommendation to buy or sell any assets. Etherfuse and its guests may hold stakes in some or all of the assets discussed.

Complacency causes problems. Not paying attention to warning signs when they are right in front of you can lead to bad outcomes.

Regarding stablecoins, one might conclude that this message has been heard, as the US Senate just passed the Genius Act, a policy that provides a regulatory framework for stablecoins.

After Circle’s mammoth IPO success, passing such a law was easier. Stablecoins, particularly US dollar stablecoins, are hot right now.

But are they too hot? If they are too hot, problems could arise.

Aaron Brogan of Brogan Law in his newsletter

provides insight into rising complacency in the US dollar stablecoin market.

In short, Aaron Brogan highlighted US dollar stablecoins and their relationship with US Treasuries. Circle’s USDC currently has $60 billion circulating supply, which combined with USDT is about 90% of the stable coin market. Circle’s coins are backed with collateral mostly held in short-term Treasury bills. At present, given the $900 billion daily secondary market for Treasuries, Circle should have no problem meeting redemptions by selling Treasury bills.

But, if the stablecoin market continues to grow as more supportive regulation comes about, and there is a confidence crisis in US Treasuries, the assumption of an easy unwind for dollar stablecoins may not hold.

There is a solution. Legislation that leads to a lower concentration of US dollar stablecoins in the overall stable coin market. Stablecoins will grow, but the growth must be spread among vehicles other than USDC and USDT. Thus, the US should permit US investors to hold stable coins and bonds in Mexico, Europe, Japan, UK, and Brazil along with other countries.

This becomes even more important when we look at the risks of the US dollar and treasury market. Aside from the structural issues like tariff uncertainty, the ratings downgrade of US government bonds, and the increasing debt burden as a percentage of GDP, there is an event coming; on May 26, 2026, Federal Reserve Chair Jerome Powell’s term ends. President Trump will appoint a new chairman, naming the candidate soon, and it is highly probable that the new chairman is going to cut interest rates more aggressively than Chairman Powell ever did.

A key question is how much? Will it be so much that investors don’t feel compensated for the risks of owning the US dollar and treasuries? Severe rate reductions can cause weakness in the US dollar and treasury market. US dollar and bond risk creates a severe headwind for US stablecoin companies like Circle to unwind collateral to meet redemptions.

Even more concerning is the possibility of a vicious cycle. If dollar, deficit, and policy concerns prompt foreigners to take money out of treasuries, US borrowing costs will go up. If US borrowing costs go up, the US fiscal position will worsen; the more money out of US Treasuries, the higher the US borrowing rate. If the borrowing rates continue to go up, there will be more fiscal pressure, and so on, and so on.

Such a vicious circle can really make unwinding USDC or USDT collateral tough.

The US government must realize that a release valve is needed for stable coins; stable coins cannot grow at a high rate, and have the growth driven by two coins, USDC and USDT. The Genius Act which puts some regulatory guard rails around stablecoins is great, but they must do more. If they do not do more and crisis hits, US dollar stable coin investors will have big problems.

If a government can react, but doesn’t react, and a crisis could have been mitigated, it is logical to conclude they own it, or at least part of it.

This blog is for educational and informational purposes only, covering general market trends, industry developments, and asset features. Nothing herein is investment advice, a solicitation, or a recommendation to buy or sell any assets. Etherfuse and its guests may hold stakes in some or all of the assets discussed.

There have been policy false starts in President Trump’s short time in office, and some of his policies seem a bit crazy. But when it comes to savings, he got it right. The Trump Account that gives every newborn American a $1000 investment in a tax advantaged index fund, not to be touched before they turn 18 is a great idea; a type of policy that can help make “America Great Again”.

Policy makers have given short shrift to the power of savings. There has not been a substantial saving policy since 1974 when the IRA-tax deferred retirement accounts were created. The government has appointed people to cut costs. Why have they not created a savings chief, a savings “Czar?

The present US savings rate is 4.9%. It was as high at 20 percent during Covid, and in the nineteen sixties and seventies it was between 6 and 9%. The European Union has a savings rate above 10%, and Japan’s is just short of 10%. The US rate must go up.

The more people save, the more confident they become. The more confident they are, the more engaged they are in the democratic process, as they have skin in the game. In the end, healthy savings rates support a healthy democracy.

Savings rates also curb inflation. In the early nineteen eighties, the US Personal Savings rate started to trend down. It was at that point that the Consumer Price Index inflected upwards. It’s easy to understand, more savings means less spending, and less spending takes some of the inertia away from inflation.

Although President Trump should be given kudos for his new savings policy, it is not enough. More must be done.

The administration should follow through on their claims of loosening regulations on crypto, employing blockchain and stable bonds as savings vehicles. Blockchain allows micro savings strategies to be pursued. As example, Etherfuse allows investors to buy bonds with as little as $1.50 per account. Saving through stable securities is also lower cost. If you lower the cost of maintaining a savings program, you increase the level of savings. Everyone wins.

Savings is a learned skill, a habit. To build the skill and create the habit, why not offer blockchain based savings programs for as low as one dollar to high school kids.

As far as vehicles go, stable coins and bonds that are truly backed by fiat currency or bonds are good solutions. A truly great savings program will include bonds and currencies from across the world. Imagine, with a small savings contribution an investor can have a portfolio of currencies and bonds in dollars, Euro, pesos, and yen.

Once again, Etherfuse can offer bonds in dollars, pesos, euros, or UK pounds. Small investors can have a diversified portfolio. There are opportunities across the world, and all savers, no matter how big they are, should have access.

So, well done President Trump, but don’t stop. Loosen the regulations on stable coins and stable bonds. Let people have multiple vehicles to save with, no matter how much money they have.

This blog is for educational and informational purposes only, covering general market trends, industry developments, and asset features. Nothing herein is investment advice, a solicitation, or a recommendation to buy or sell any assets. Etherfuse and its guests may hold stakes in some or all of the assets discussed.