- Binance received approval from a United States court to invest customer funds into US Treasury bills
- The court stipulated that Binance could invest customer funds custodied at BitGo in Treasury Bills maturing along a four-week basis
- The approval foreshadows cryptocurrency’s potential role in shoring up demand for the US dollar amid de-dollarization efforts by the BRICS nations
The United States District Court for the District of Columbia has approved crypto exchange Binance to invest certain customer funds into US Treasury Bills. According to the court order, Binance will be allowed to invest customer assets through a third-party investment manager, as long as the funds do not get invested back into Binance or its related entities.
The court stipulated that Binance could invest customer funds custodied at BitGo in Treasury Bills maturing along a four-week basis. The order also requires Binance to produce data outlining any costs associated with maintaining the custodied US treasury investments in its monthly reports.
Stablecoins Seen as Way to Extend US Dollar Dominance
The Binance court approval highlights how cryptocurrencies could help prop up demand for the struggling US dollar as countries like the BRICS nations try to move away from the dollar. Specifically, collateralized stablecoins have been suggested as a potential way to extend US dollar dominance for decades by purchasing and holding US debt. This could offset some of the massive inflation stemming from years of quantitative easing, poor monetary policy, and reckless fiscal policy.
The Tether (USDT) stablecoin is one example. In 2022, Tether held $72.5 billion in US Treasuries, on par with some developing countries. The company touts the overcollateralization of its dollar-pegged stablecoin as protection against collapse.
Former US House Speaker Paul Ryan has also noted how stablecoins create significant demand for the US dollar and debt instruments backing these fiat-equivalent tokens. This demand could help the dollar remain competitive in global trade. However, some like Alex Gladstein believe stablecoins just entrench the broken fiat system that decentralized cryptocurrencies were meant to replace.
Conclusion
The recent court approval allowing Binance to invest customer funds in US Treasuries signals the growing role cryptocurrencies could play in stabilizing the US dollar, especially through collateralized stablecoins. However, critics argue this just perpetuates the problems with fiat that cryptocurrencies aimed to solve. The debate continues on whether stablecoins are a benefit or detriment to the future of money.
