The Irony of De-Dollarization: How USDT is Fueling Global Trade While China's Yuan Lags Behind

The Unexpected Rise of Stablecoins in Emerging Markets

On the streets of Bolivia, a bright green BYD Dolphin Mini electric vehicle is advertised with a surprising twist: it's sold for USDT, a cryptocurrency backed by U.S. treasuries. This highlights a deep irony in China's push for de-dollarization, where the yuan remains sidelined in academic theories, while crypto-dollars like USDT power real-world trade.

China has spent years promoting de-dollarization in Latin America, framing it as economic independence from the U.S. Bolivia now settles about 10% of its trade in yuan, Brazil has a significant yuan swap line, and Argentina uses renminbi to avoid default. Yet, for retail consumers and merchants, the reality is different. USDT offers stability, speed, and liquidity that the yuan cannot match, especially in inflation-strapped or capital-controlled economies.

The yuan isn't designed for offshore use, which limits its appeal. Instead, Chinese exports—like EVs, soy, and lithium—are fueling demand for USDT, not the RMB. This creates a situation where China wins on exports but loses monetary influence. Tether's crypto-dollar is conquering emerging markets, while China's central bank digital currency (CBDC) pilots remain confined domestically.

Stablecoins deliver what CBDCs and yuan swap lines cannot: global trust and efficiency. This grassroots re-dollarization entrenches the U.S. dollar's dominance in a new digital form, making it tough to shake its reserve currency status. Despite talks of BRICS currencies or CBDCs, practical trade still runs through USDT, the digital dollar dominating emerging markets.

Market Movements

• BTC: Trading above $114.5K with a slight downward trend, facing resistance around $115,000-$117,000. Driven by institutional interest and U.S. rate cut expectations.
• ETH: At $4400, slightly soft with weak momentum, though ETF inflows ended the week positively.
• Gold: Near record highs due to a weaker U.S. dollar, Fed rate cut hopes, and inflation concerns.
• Nikkei 225: Up 1.28% as Asian markets rose, influenced by steady Chinese loan rates and Wall Street gains.

Elsewhere in Crypto

• Prediction markets and DAOs are compared as cousins by Syndicate's co-founder.
• Vitalik Buterin emphasizes low-risk DeFi over memecoins for sustaining Ethereum's economy.
• ETF listings have become easier, according to CoinDesk's policy analysis.

Note: Parts of this article were generated with AI assistance and reviewed for accuracy.