The New Petrodollar? How Trump is Repeating Nixon’s Experience

During his election campaign, Donald Trump repeatedly referred to Bitcoin in his speeches. Now he is back in the White House and has indeed signed an executive order entirely dedicated to digital finance.

Contrary to expectations, there is no mention of Bitcoin in this document. Instead, it highlights the special role of stablecoins in the state strategy. Coinpaper investigated what the US President’s plan consists of.

January Decrees

President Donald Trump’s team has managed to convince a significant part of the community that the new White House administration will create a favorable climate for the development of cryptocurrencies worldwide. Business is expected to receive a new impetus for development, and the industry will penetrate deeper into the financial market, which will ultimately lead market participants to prosperity and success.

Perhaps this is how it will be. However, until this happens, it is worth taking a closer look at what exactly the Trump team is focusing on and what it sees as the essence of cryptocurrencies. The long-awaited decree of the US President was published on January 23 on the White House website under the title “Strengthening American Leadership in Digital Financial Technology.”

The second paragraph of the document is devoted to “promoting and protecting the sovereignty of the United States dollar, including through actions to globally promote the development and growth of regulated stablecoins backed by the dollar”.

This provision is reinforced by a ban on all types of development and promotion of a central bank digital currency (CBDC). Together, these two points indicate an intention to open a green corridor for private stablecoins, whose issuers buy up US government bonds.

The remaining parts of the decree do not contain clear instructions regarding other cryptocurrencies, including Bitcoin. Although digital gold was definitely the flagship of any legislative initiatives during the election campaign, it was not highlighted in any way in the final document.

Nixon’s Experience

To understand the logic of the Trump team, one should recall 1971, when US President Richard Nixon abolished the linking of the dollar to gold. The American leader took such measures due to the continuously growing budget deficit and the colossal costs of the war in Vietnam.

Despite the “Nixon shock,” the dollar was kept as the global currency for international settlements. And the abandonment of the gold standard allowed the government to print a virtually unlimited amount of money.

The abolition of the standard exacerbated a powerful crisis in the energy market. In 1973, it was triggered by the Arab states, which imposed an embargo on oil supplies to countries that supported Israel in the Yom Kippur War. By 1974, prices for black gold had increased about seven times, and by the end of the decade — by 20.

Already in 1973, the term “petrodollars” appeared, denoting the separate exclusive importance of the American currency in energy trade: it turned out that the whole world needed oil, and it began to be sold only for dollars. Thus, the United States had room to print an unlimited amount of debt obligations, which would still be queued up.

The situation spiraled out of control during the coronavirus pandemic. Since then, the US national debt has been steadily increasing by several trillion dollars a year. In parallel, there is a drop in demand for American government bonds due to the departure of some market participants into alternative settlements. The US leadership faced economic problems reminiscent of 1971.

Oil, Stablecoins, Inflation

The government’s key task now is not to reduce the national debt, but to increase demand for new obligations. And if we recall that Tether is among the top 20 largest buyers of US government debt, which it uses to issue USDT, the picture is forms in the best possible way. Now the authorities of the largest economy say in plain text that they support stablecoins around the world. But on one condition: if they are secured by the dollar.

Of course, this is not quite the petrodollar from the 1970s, but there is definitely a correlation. Especially if we start from the inflation that grew from the 1960s to the 1980s after the long years of stability that followed the Second World War.

However, officials say that things are completely different this time. For example, former Federal Reserve (Fed) Chairman Ben Bernanke noted that today the American central bank has sufficient independence to make strategic decisions based solely on economic data, and not on short-term political considerations.

However, with the arrival of Trump, the Fed may be very dependent on officials. The US President has already stated that he understands monetary policy better than those who determine it.

Large companies began to integrate into this trend in 2024. BlackRock is actively promoting the concept of RWA in various industries, but at the same time, specialized crypto experts talk about the value of tokenization only of debt obligations.

Government bonds are exactly what the stablecoin market needs, which is essentially engaged in the following: buying, issuing tokens, earning interest and buying again. This can be continued if not indefinitely, then for a very long time. The effectiveness of the approach has already been demonstrated by the issuers of USDT and USDC, who earned billions in 2024 alone. One can imagine what will happen with full approval of the US authorities.

Prospects for the Cryptocurrency Market

Following historical examples, we are waiting for another powerful crisis, accompanied by a widespread increase in prices for globally significant goods, and a return to the dollar as the main transit unit between them.

Perhaps everything will be fine, and we will see a fairer financial system. But so far, only an attempt to create a new round of prosperity in debt relations is obvious.

Oddly enough, cryptocurrencies have become a central element in the development of these ideas. At the center of the economy are still public debts, and the distributed nature of the blockchain allows this trend to be fully realized.