Money After AI: Meet the New Digital Dollar Built for the Internet "Stablecoins" | EP #200

The Necessity of Stablecoins

Jeremy Allaire opens with a detailed and precise definition of stablecoins, emphasizing their role as fully reserved, fiat-backed digital currencies operating on public blockchain networks. Unlike traditional cryptocurrencies speculating on value, stablecoins like USDC maintain a strict one-to-one backing with fiat currencies such as the US dollar or the euro, ensuring stability and trust. They provide a safer, more ethical form of digital money that can inherit the unique advantages of the internet—global reach, transparency, programmability, and near-zero transaction costs. Jeremy explains the legal recognition stablecoins are now receiving worldwide, being enshrined as a legitimate form of electronic money, especially under laws like the US Genius Act, which provides clarity and regulatory confidence in this space.

A central theme arises around the inefficiencies and risks attaching to the current fractional reserve banking system. Jeremy candidly points out that banks today operate by lending out deposits multiple times over, a practice that historically underpins systemic risks such as bank runs. Stablecoins, however, represent a paradigm shift—a full reserve model where each issued digital dollar is backed by real, high-quality collateral like short-duration US Treasury bills and cash held at reputable custodians such as Bank of New York Mellon. This full reserve approach ensures that digital dollars are as secure as possible, offering a new "base layer money" suitable for the internet age, which separates money from credit and lending.

US Dollar's Global Reserve Currency Status

The discussion then pivots to a crucial geopolitical concern: can stablecoins help maintain the US dollar's position as the global reserve currency in an increasingly multipolar world? Jeremy and the panel dissect the historical context of the dollar's dominance, from its post-WWII ascendancy to the dramatic shift in 1971 when the US severed the dollar's link to gold, ushering in fiat currency based on "full faith and credit" backed by sovereign power.

Recent geopolitical tensions, like Russia's invasion of Ukraine, have exposed vulnerabilities in the current global financial infrastructure, notably around access to payment messaging systems like SWIFT and US Treasury securities. This has fueled debates about alternatives to the dollar and augmented speculation about its waning dominance. However, Jeremy argues that the dollar's network effects—its deep liquidity and integration into global payment systems—remain extraordinarily strong.

What stablecoins add, according to him, is the opportunity to supercharge the dollar's utility by digitizing it for the internet era. By enabling free market competition for digital dollar representations through stablecoins, the US can export its internet-based financial infrastructure globally and strengthen its monetary network effects. This vision is aligned with the regulatory frameworks emerging in the US, which aim to foster innovation while preserving stability and trust. The Genius Act is a major milestone in this direction, signaling the government's intent to embrace and regulate stablecoins as a foundational part of the future monetary ecosystem.

The Building Blocks of USDC

Jeremy highlights Circle's commitment to transparency and regulatory compliance, distinguishing USDC from other stablecoins. USDC's backing portfolio, consisting mostly of highly liquid short-duration US Treasuries and cash equivalents, is transparently managed through a public reserve fund that investors and users can audit daily, often in partnership with BlackRock. This structure ensures overcollateralization and maximum safety of the digital dollar, aligning fully with stringent regulatory requirements imposed by agencies like the New York Department of Financial Services. This meticulous design builds confidence among institutional investors, large corporations, and governments, laying the groundwork for broader adoption.

The conversation also delves into the inventions and challenges around integrating stablecoins with existing financial infrastructure—like partnering with banks and financial institutions that maintain lending and deposit functions—while stablecoins function as a purely digital money layer free of risk associated with credit creation. This delicate balance prevents regulatory concerns about stablecoins acting as de facto central banks while enhancing payment efficiency.

The Future of Money

With AI rapidly transforming all facets of the economy, Jeremy and the panelists enthusiastically explore how intelligent agents and AI-driven economic activity will intersect with digital money. Jeremy shares his vision of "economic operating systems" built on blockchain networks, which can enable autonomous agents—both human-driven and AI-powered—to transact in trustless environments at internet speeds. The programmable money that stablecoins provide will fuel an explosion of new business models where AI intermediates payments and execution of contracts, vastly increasing the velocity and complexity of economic exchange.

This phenomenon will power everything from microtransactions to multi-billion-dollar digital derivatives and onchain treasury management, fundamentally disrupting the traditional corporate structure itself. Jeremy paints a future in which corporations morph into fully onchain entities governed by smart contracts and stakeholder-led governance mechanisms, combining AI and human workforces to operate with unprecedented agility and transparency. As a harbinger, protocols like Hyperliquid exemplify this shift, generating billions in revenue with lean, distributed teams empowered by tokenized incentive structures.

Regulation, Risks, and the Path Forward

Both Jeremy and his co-hosts acknowledge that such profound change requires evolving regulatory frameworks that adapt to technological innovation without stifling it. While stablecoins inherit the monetary policy of central banks rather than replace them, regulators must ensure robust controls and transparency—many of which blockchain infrastructures naturally enable via cryptographic proofs and real-time auditability.

Jeremy also discusses operational nuances, such as settlement finality on blockchains balanced against legal obligations like sanctions compliance that may require freezing or reversing accounts in certain cases. Building higher-level protocols, for instance, refund mechanisms layered atop blockchain transactions, will facilitate retail adoption and consumer protections essential for mass-market commerce.

As the regulatory landscape currently tilts toward embracing innovation—at least in the US with the Genius Act—competition is intensifying with new stablecoins entering the market. Still, Jeremy believes stablecoins like USDC, with a strong regulatory foundation and institutional partnerships, will capture substantial market share, underpinning global commerce and cross-border payments for years to come.

Vision for the Next Decade

Closing on an aspirational note, Jeremy reflects on the founding mission of Circle, which remains resolutely focused on raising global prosperity through the frictionless and safe exchange of value. Although the industry is still in its infancy, the groundwork has been laid for a future where economic velocity accelerates dramatically, measurable increases in global GDP arise from this new financial infrastructure, and billions worldwide gain access to more inclusive, resilient money systems.

The fusion of AI, blockchain-based stablecoins, and novel corporate architectures promises to disrupt legacy financial and organizational paradigms—ushering in an era of abundance driven by trust, transparency, and technological innovation. By making USDC and the digital dollar a cornerstone of this transformation, the US stands poised to maintain leadership in monetary policy and innovation, cultivating an ecosystem that supports millions of new entrepreneurs worldwide.