November 20th, 2025

India’s debt-backed stablecoin challenge to US dollar dominance explained

As governments worldwide debate the merits and dangers of digital currencies, India appears poised to launch its own state-backed stablecoin that uses government debt as collateral.

Proponents argue that the Asset Reserve Certificate (ARC) could hasten the global drive towards de-dollarisation, lower India’s borrowing costs and create a “virtuous cycle” for public funding by diversifying the country’s investor base.

By tying the token to sovereign debt, developers aim to create a transparent system that complements the central bank’s monetary framework and limits outflows of local liquidity into dollar-backed cryptocurrencies.

The ARC, under development by international blockchain giant Polygon and India-based fintech Anq, would function as a stablecoin: a cryptocurrency engineered to maintain a steady value, avoiding the volatility that plagues speculative digital assets like bitcoin.

Every unit of the regulated digital token would be backed one-to-one by Indian government securities or treasury bills – debt instruments issued by the state to finance public spending – maintaining a steady value pegged to the rupee while operating on private blockchain infrastructure.

Its backers say that by tying the digital token directly to sovereign debt, India could keep local liquidity at home instead of letting it leak offshore.

“Success could establish India as the template for upholding private blockchain innovation while maintaining financial sovereignty,” Benjamin Grolimund, general manager of cryptocurrency exchange Flipster, told This Week in Asia.

ARC could enable “significant crypto market capture” for the world’s most populous nation, he said. “India’s move asserts the trend towards de-dollarisation as other [Asia-Pacific] hubs advance their own currency-backed stablecoin frameworks”.

‘Legal limbo’

India, home to one of the world’s largest crypto user bases, has seen surging adoption among both its vast diaspora and a young, digitally native population.

Digital currencies are helping to meet the diaspora’s remittance needs, while young Indian adults are increasingly embracing crypto trading, according to a recent Chainalysis report.

Yet cryptocurrencies remain unregulated in the country, neither illegal nor formally sanctioned, following a 2020 Supreme Court decision that overturned a ban by the central bank amid concerns about its potential for money laundering and terrorism financing.

The ARC’s success could depend on whether India can establish regulatory frameworks to address consumer protection, market conduct and financial stability.

Analysts note the need for legislative clarity: would ARCs be recognised as digital government securities or as payment instruments? Would oversight fall solely under the central bank or be shared with the Securities and Exchange Board of India?

Defining the regulator will be crucial, as will clarifying if non-residents can hold the token, whether settlements can occur offshore and what mechanisms exist for clean conversion between rupees and foreign currency.

“Without statutory backing, disputes over redemptions, custody failures or censorship could land in legal limbo,” warned Anndy Lian, a Singapore-based adviser on blockchain policy.

Risks vs rewards

While Singapore, Hong Kong and Japan have experimented with similar digital tokens, India’s ARC could be the first public, tradeable stablecoin issued privately but backed by state assets.

“India may do something no other major economy has attempted; turn its government securities into a programmable digital asset,” said Raj Kapoor, chairman of the India Blockchain Alliance.

Such a token would align with the Indian central bank’s push to introduce a digital currency and secure the benefits of crypto without dollar-denominated dependence, Kapoor said.

Success is far from certain, however. Overcentralisation risks rebranding government bonds without meaningful innovation, while under-regulation could introduce legal and financial vulnerabilities.

“The risk is that, if over-controlled, it becomes just dematerialised G-Secs [government securities] in a new wrapper with little innovation,” Kapoor said.

But if designed with care, it could be the catalyst that pulls decentralised finance and global liquidity into India’s bond market, strengthening the rupee and setting a new global benchmark.

Source: https://www.scmp.com/week-asia/economics/article/3333378/indias-debt-backed-stablecoin-challenge-us-dollar-dominance-explained?registerSource=loginwall

Anndy Lian

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com

j j j

July 9th, 2025

The new gold standard? Bitcoin’s macro hedge role amid US debt and trade turmoil

The interplay of global macroeconomic dynamics and cryptocurrency market trends presents a complex tapestry of investor sentiment, speculative positioning, and structural shifts in asset valuation frameworks.

At the forefront of this landscape lies Bitcoin (BTC), whose recent price action and derivatives market metrics have sparked intense scrutiny. Simultaneously, Ethereum’s (ETH) unique capacity to generate organic yield through protocol-level mechanisms offers a stark contrast to Bitcoin’s store-of-value narrative.

To dissect these phenomena, we must contextualise Bitcoin’s soaring open interest within broader market psychology while contrasting Ethereum’s yield-generating potential against traditional financial paradigms.

Bitcoin’s derivatives surge: Implications for price dynamics

Bitcoin’s derivatives market has reached unprecedented levels of activity, with total open interest across exchanges hitting US$73.59 billion, a figure that underscores the growing institutionalisation of crypto markets. This metric reflects the total notional value of outstanding futures and options contracts, serving as a barometer for speculative fervour and hedging activity.

The dominance of regulated venues like CME (US$16.71 billion) and Binance (US$12.08 billion) highlights divergent participant profiles: CME’s institutional-heavy structure versus Binance’s retail-driven ecosystem. Such bifurcation amplifies market complexity as macro-hedge funds and algorithmic traders interact with retail sentiment, often leading to asymmetrical price discovery mechanisms.

Historically, surges in open interest have preceded heightened volatility. For instance, Bitcoin’s 2021 bull run saw open interest peak at US$25 billion before a 35 per cent correction, illustrating the liquidation risks inherent in leveraged positions. The current US$73.59 billion figure, however, operates within a transformed regulatory and infrastructural environment.

Institutional-grade custody solutions and improved risk management tools have enhanced market resilience, potentially mitigating cascading liquidations even during sharp corrections. Yet, the concentration of US$28.79 billion in the top two exchanges raises concerns about systemic interconnectivity, particularly given Binance’s recent regulatory challenges and CME’s role as a clearinghouse for macro funds.

The psychological significance of Bitcoin’s US$100,000–US$110,000 range cannot be overstated. Having breached this threshold in May 2025, BTC’s subsequent consolidation reflects a classic accumulation phase, wherein long-term holders absorb volatility while short-term speculators test support levels.

On-chain data revealing 19,400 BTC inflows to institutional wallets corroborates this thesis, suggesting strategic positioning ahead of anticipated catalysts, possibly tied to the US election cycle or ETF approval timelines. Notably, the 0.9 outflow/inflow ratio signals net accumulation, a bullish indicator historically associated with multi-month rallies.

However, the persistent short-side pressure on Binance derivatives, despite BTC’s resilience, introduces a tug-of-war dynamic where capitulation events could trigger explosive moves in either direction.

From a technical perspective, the US$100,000–US$110,000 range may serve as a springboard for a parabolic rally, as suggested by cyclical patterns observed in prior halving cycles. The nine per cent correction to US$98,300 in June 2025 barely grazed the 200-day moving average, preserving the uptrend’s integrity.

Should volume profiles expand alongside institutional inflows, a breakout above US$111,800 could activate algorithmic buy orders, propelling BTC toward US$120,000 by year-end. Conversely, a decisive close below US$95,000 would invalidate this thesis, potentially triggering a retest of US$85,000 support—a scenario deemed low probability by analysts tracking on-chain fundamentals.

Ethereum’s yield paradigm: A structural shift in crypto valuation

While Bitcoin dominates headlines as a macro hedge and digital gold, Ethereum’s evolution into a yield-generating infrastructure asset represents a seismic shift in crypto-economics.

Unlike Bitcoin’s fixed-supply, proof-of-work model, which relies solely on a monetary premium for returns, Ethereum’s post-Merge architecture enables stakers to earn ~three per cent annualised yields through network validation. This organic cash flow mechanism aligns Ethereum with traditional income-producing assets, bridging the gap between decentralised protocols and institutional portfolios.

Staking’s appeal lies in its dual function as both a security mechanism and a revenue stream. By locking ETH to validate transactions, participants secure the network while earning issuance rewards and transaction fees.

Restaking protocols like EigenLayer further amplify yields by allowing staked ETH to secure third-party applications, creating a layered economy of risk and return. This operational model contrasts sharply with Bitcoin’s reliance on financial engineering, such as ETFs or lending products, to generate yield, positioning Ethereum as a hybrid between a utility network and a capital asset.

The implications for institutional adoption are profound. Traditional investors, accustomed to dividend-paying equities or coupon-bearing bonds, often struggle to reconcile Bitcoin’s non-yielding nature with portfolio allocation models. Ethereum’s three per cent base yield, however, provides a familiar entry point, particularly for sovereign wealth funds and pension schemes seeking inflation-hedged returns.

BlackRock’s recent filings for an Ethereum ETF underscore this trajectory, signaling a potential influx of US$50 billion or more in institutional capital should regulatory hurdles ease.Moreover, Ethereum’s yield ecosystem extends beyond passive income. Decentralised finance (DeFi) protocols enable dynamic strategies—such as liquidity provision or leveraged staking—that can boost returns to 8–12 per cent, albeit with elevated risk.

This programmable yield, combined with Layer 2 scaling solutions reducing transaction costs, creates a virtuous cycle of capital inflows and network utility. In contrast, Bitcoin’s yield opportunities remain tethered to centralised intermediaries (e.g., BlockFi’s interest accounts), exposing holders to counterparty risks that Ethereum’s trustless staking avoids.

Intermarket dynamics: Bitcoin, Ethereum, and macro resilience

The divergence between Bitcoin and Ethereum narratives plays out against a backdrop of global uncertainty. With US Treasury yields climbing toward five per cent and trade wars intensifying, risk assets face headwinds that disproportionately impact high-duration investments.

Bitcoin’s correlation with Nasdaq equities, evident in its muted response to tariff-driven volatility, suggests lingering sensitivity to Fed policy. Ethereum’s staking yield, however, may decouple it from traditional tech valuations, as its cash flows provide downside protection during liquidity crunches.

Gold’s retreat to US$3,300/oz amid dollar strength further highlights Bitcoin’s evolving role as a non-sovereign reserve asset. While gold remains a crisis hedge, its lack of yield and logistical constraints in storage and transmission render it inferior to programmable digital alternatives.

Ethereum’s ability to offer both appreciation potential and income generation could accelerate this substitution effect, particularly in emerging markets grappling with currency debasement and capital controls.

Energy markets also influence crypto dynamics. Brent crude’s rebound to US$70/bbl, despite OPEC+ supply increases, underscores the inflationary pressures that have historically buoyed BTC. Ethereum benefits indirectly, as stable energy prices reduce miner capitulation risks—a concern during Bitcoin’s 2022 bear market.

Furthermore, Ethereum’s energy-efficient proof-of-stake model aligns with ESG mandates, granting it a regulatory advantage in jurisdictions that prioritise sustainability.

Strategic outlook: Navigating the dual narrative

For portfolio managers, the Bitcoin-Ethereum dichotomy demands nuanced allocation strategies. Bitcoin’s role as a macro hedge against fiscal profligacy and currency debasement remains intact, particularly with US gross federal debt exceeding 130 per cent of GDP. Institutions seeking pure exposure to global liquidity expansion should prioritise BTC, leveraging derivatives to hedge against short-term volatility while accumulating during dips in the inflow ratio.

Ethereum, meanwhile, appeals to investors seeking alpha through participation in the protocol. The three per cent staking yield acts as a floor for total returns, with DeFi and NFT ecosystems offering asymmetric upside. A 60/40 BTC-ETH portfolio, rebalanced quarterly, could optimise risk-adjusted returns while capturing both monetary and utility premiums. Retail traders, conversely, may exploit Ethereum’s yield volatility through options straddles or basis trades, capitalising on protocol upgrade cycles.

Regulatory developments will loom large in Q3 and Q4 2025. The SEC’s impending rulings on spot Ethereum ETFs, coupled with MiCA compliance deadlines in Europe, could catalyse a US$200 billion inflow into compliant crypto products. Bitcoin’s derivatives market, now a US$73.59 billion ecosystem, may see regulatory convergence as the CFTC intensifies oversight, a double-edged sword that enhances legitimacy while squeezing unregistered exchanges.

In conclusion, the confluence of derivatives-driven speculation in Bitcoin and Ethereum’s yield revolution encapsulates crypto’s transition from fringe assets to mainstream infrastructure. While Bitcoin’s path hinges on macro resilience and institutional flows, Ethereum’s ascent depends on its ability to sustain yield premiums amid rising competition from layer-2 ecosystems.

Both assets, however, share a common destiny: redefining the storage and transfer of value in an era of unprecedented monetary experimentation. Investors who grasp this duality stand to navigate the volatility ahead with clarity, positioning themselves at the intersection of innovation and tradition.

Source: https://e27.co/the-new-gold-standard-bitcoins-macro-hedge-role-amid-us-debt-and-trade-turmoil-20250709/

Anndy Lian

www.anndy.com

j j j

March 29th, 2025

Can Bitcoin rescue US debt? Senator Lummis says yes

The market wrap offers a fascinating snapshot of where we stand on March 28, 2025—a moment marked by cautious sentiment, looming trade tensions, and a bold proposition from Senator Cynthia Lummis about Bitcoin’s potential to halve the US national debt over two decades. Let me offer my perspective on this complex tapestry, weaving together the threads of traditional finance, geopolitical strategy, and the disruptive promise of cryptocurrency.

The global risk sentiment pulling back isn’t surprising given the spectre of reciprocal tariffs and an escalating trade war under US President Donald Trump’s administration. Trump’s promise to announce new tariffs by April 2, following the already imposed 25 per cent tariff on car imports, has investors on edge. Trade wars are notoriously double-edged swords—they can protect domestic industries in the short term but often lead to higher consumer prices, disrupted supply chains, and retaliatory measures that dampen global growth.

The cautious mood in the markets reflects this uncertainty, with investors weighing the immediate risks against the longer-term implications. The fact that Asian equities are trending lower in early trading and US equity futures suggest a flat open only underscores the hesitancy rippling through the financial world.

Amid this unease, attention is shifting toward key economic data points like the upcoming US personal consumption expenditures (PCE) report due later today. As the Federal Reserve’s preferred gauge of inflation, the PCE will offer critical insights into the health of the US economy. If it signals slowing growth—perhaps exacerbated by trade tensions—we could see louder calls for interest rate cuts.

The bond market seems to be pricing in this possibility already, with shorter-maturity yields dipping as the prospect of Fed easing looms. The steepening of the 10Y-2Y Treasury yield curve, with the 10-year yield ticking up to 4.36 per cent and the 2-year falling to 3.99 per cent, suggests a nuanced outlook: short-term relief from potential rate cuts, but longer-term concerns about inflation or debt sustainability. It’s a delicate balance, and one that investors are watching closely.

Meanwhile, defensive sectors like Consumer Staples and Health Care are holding up better than the broader MSCI US index, which slipped 0.4 per cent. This flight to safety is a classic move when uncertainty reigns—staples and health care tend to weather economic storms more resiliently than cyclical sectors. Gold’s 1.3 per cent climb toward US$3,100 per ounce reinforces this haven-seeking behaviour, as does Brent crude’s modest rise to US$75 per barrel despite the tariff threats.

The US Dollar index, down 0.2 per cent, seems to be taking a breather after recent gains, perhaps reflecting mixed signals between Fed cut expectations and the dollar’s safe-haven status. Across the Pacific, Tokyo’s accelerating inflation keeps the Bank of Japan on its gradual rate-hike path, a contrast to the Fed’s potential pivot that highlights the diverging monetary policies shaping global markets.

But the real headline-grabber in this market wrap is Senator Cynthia Lummis’s audacious claim at the DC Blockchain Summit that Bitcoin could slash the US national debt—currently a staggering US$36 trillion—in half over 20 years. It’s a bold statement, one that demands scrutiny given its implications for both fiscal policy and the role of digital assets in the global economy.

Lummis argues that Bitcoin’s scarcity (capped at 21 million coins), immutability (thanks to blockchain’s tamper-proof nature), and storability make it an ideal long-term asset for national stability. She’s not alone in this vision—Microstrategy CEO Michael Saylor, a vocal Bitcoin advocate, doubled down at the summit, calling it “Manifest Destiny” for the US Together, they’re pushing for Bitcoin to become a strategic reserve asset, a move that could redefine America’s financial playbook.

Let’s unpack this idea. The US national debt has ballooned over decades, fuelled by deficit spending, wars, tax cuts, and economic stimulus packages. At US$36 trillion, halving it to US$18 trillion by 2045 would be a monumental feat. Lummis’s plan hinges on the government acquiring and holding a significant Bitcoin stash—Saylor has suggested five per cent of all Bitcoin, or roughly 1 million coins.

At today’s price of US$86,680 per Bitcoin, that’s about US$86.7 billion—a drop in the bucket compared to the debt. The magic lies in Bitcoin’s potential appreciation. If its price were to soar 250-fold over 20 years, as some optimistic models suggest, that US$86.7 billion could balloon to US$21.7 trillion—enough to offset half the current debt, assuming it doesn’t grow further (a big assumption given historical trends).

Is this plausible? Bitcoin’s historical performance lends some credence. Since 2010, its price has surged from pennies to tens of thousands, driven by adoption, scarcity, and speculative fervor. But past performance isn’t a crystal ball. A 250x increase from US$86,680 would push Bitcoin to over US$21 million per coin by 2045—an astronomical leap requiring sustained demand, regulatory clarity, and global economic shifts favouring digital assets.

Critics, like Judd Legum in an X post last year, have called this math “implausible,” noting that even static debt levels would demand unprecedented growth. Add in compounding debt from interest and new deficits, and the hurdle grows steeper.

Yet, Lummis and Saylor see Bitcoin as more than a speculative bet—it’s a hedge against a weakening dollar and a tool to “shore up” its status as the world’s reserve currency. With the dollar losing purchasing power over time (a point Lummis emphasised), a rising Bitcoin stash could offset that erosion, providing a growing asset to balance the books.

It’s a radical rethink of sovereign wealth, akin to nations hoarding gold in the 20th century. Posts on X reflect a mix of enthusiasm and skepticism—some hail it as visionary, others dismiss it as crypto hype. The sentiment is split, but the idea’s boldness is undeniable.

Today’s Bitcoin market offers a microcosm of this tension. At US$86,680, it’s bracing for a record-breaking US$16.5 billion options expiry—yet a recent drop below $90,000 has flipped the script.

Bullish call options, with US$7.6 billion tied to strikes at US$92,000 or higher, now look shaky, needing a 6.4 per cent rally by day’s end. Bears, meanwhile, dodged a US$3 billion bullet, gaining leverage that could pressure prices short-term. This volatility underscores Bitcoin’s dual nature: a high-stakes asset with transformative potential, but also a rollercoaster prone to sharp swings.

Contrast this with Ethereum, where spot ETFs saw a US$4.2 million net outflow yesterday. Unlike Bitcoin’s haven appeal, Ethereum’s ecosystem—tied to smart contracts and decentralised finance—seems less insulated from risk-off sentiment. Its US$6.871 billion ETF net asset value pales beside Bitcoin’s dominance, hinting at differing investor narratives. Bitcoin’s story is increasingly one of scarcity and stability; Ethereum’s is innovation and utility, with less immediate allure in turbulent times.

So, where do I land on all this? I’m both intrigued and cautious. The market’s current mood—wary of tariffs, hopeful for Fed cuts, and leaning into havens—feels like a prelude to bigger shifts. Lummis’s Bitcoin proposal is a lightning rod: it challenges conventional fiscal wisdom while spotlighting cryptocurrency’s growing clout.

The data backs its theoretical upside—Bitcoin’s scarcity and past growth are real—but the leap to national debt savior requires faith in uncharted waters. Trade wars and inflation could bolster its case if traditional systems falter, yet execution risks (regulation, custody, market crashes) loom large.

Ultimately, we’re at a crossroads. The markets are jittery, policymakers are experimenting, and Bitcoin’s role is up for debate. Whether it’s a pipe dream or a game-changer, Lummis has ignited a conversation that’s worth watching—preferably with a keen eye on the PCE data tonight and a tariff announcement next week. The stakes, like the debt, are sky-high.

Source: https://e27.co/can-bitcoin-rescue-us-debt-senator-lummis-says-yes-20250328/