It can be said that stablecoins pegged to the US dollar can not only safely increase the money supply, but can actually improve it. In fact, it will promote economic growth in the United States by splitting our money supply in two.
One part - the pegged stablecoin - will be used for faster and cheaper transactions. The other part - the US dollars held in bank accounts - will be used to lower the cost of borrowing US dollars.
Only a specific type of stablecoin can produce these economic benefits. Any token that promises "returns" or "dividends" may be considered a security, and any trading involving such tokens may incur capital gains tax.
Even if the structure of stablecoins is similar to Tether (which received a negative assessment from Standard & Poor's) and does not promise returns to holders, if the stablecoin's asset portfolio is not strictly limited to US dollars held in bank accounts, it will not benefit the US money supply and economy.
Stablecoins like Tether have serious, potentially fatal flaws, as there may be a "bank run." Any stablecoin that invests in something other than US dollars in bank accounts cannot guarantee its holders the ability to redeem their stablecoin at any time, in full, and at 100% of its face value.
Tokens like Tether should never expect a black swan event to occur. A true stablecoin can be bought and redeemed at a price of $1, and its value is assumed to never fluctuate. It does not yield returns and does not appreciate. There is no reason to "hold" such stablecoins.
However, people believe that stablecoins can be faster, easier to trade, and have higher trading value than fiat currency. This superior functionality will drive demand, meaning stablecoin issuers/sponsors can operate stablecoins by retaining fiat currency deposit rates paid to custodian banks, thus making a profit.
At the same time, real stablecoins will not chase the same goods and services as fiat currency, as it is a high-speed currency used only for transactions. The US dollar deposits held in bank accounts to support stablecoins will be stable long-term deposits, which will allow banks to lend at lower interest rates.
Therefore, true anchored stablecoins will (1) expand the money supply without causing inflation, and (2) lower the cost of borrowing fiat currency.
Such stablecoins will not encounter any issues with central bank digital currencies (CBDC). They easily comply with existing laws, do not harm the banking system, and prevent the government from using currency as a weapon for surveillance and control.
