Over 98% of stablecoins are dollar backed. That’s good for the U.S.—until it’s not

Stablecoins, a form of cryptocurrency pegged to a real world asset, are becoming part of the global financial system, with firms like Visa and Stripe rushing to distribute them. They are also overwhelmingly dollar based. While there are euro stablecoins and gold stablecoins, more than 98% of the total market supply is pegged to the greenback, and that will have major consequences for the future of the global economy say experts.

Speaking at the Milken Institute conference in Beverly Hills on Tuesday, Haseeb Qureshi of the venture capital firm Dragonfly noted that stablecoins are loosening the iron grip that governments have always wielded over their populations’ money supply.

“Stablecoins are intrinsically subversive. Most people in the world live under capital controls and don’t have the freedom to own whatever financial assets they want,” he said.

For practical purposes, this means more of the world’s population is poised to use U.S. dollars for transactions and for their personal savings. This adoption will be driven by how easy it is to move dollar-denominated stablecoins around the internet.

Barry Silbert, the billionaire founder of the crypto consortium Digital Currency Group, noted that this trend will be a boon for the United States since it will further cement the dollar’s current status as the world’s reserve currency. If the global population becomes increasingly dependent on the dollar, that will in turn serve the country’s geopolitical interests.

In response, Silbert predicted, some governments will to seek to promote a tightly controlled version of stablecoins known as CBDCs, or central bank digital currencies. China is already doing so with its digital yuan. But given that these currencies lack global fungibility and are highly surveilled, it is highly unlikely they will emerge as serious rivals to dollar-backed stablecoins.

All of this, said Silbert, is part of a broader transformation of financial markets known as tokenization, that will see investable assets of all sorts recorded on blockchains. He predicted that this process, which will make it far easier to view and transfer assets across borders, will blur the distinction between public and private markets, and U.S. and international capital pools.

When it comes to the spread of dollar-based stablecoins, however, Silbert says most people have not recognized the phenomenon will have negative consequences as well. The biggest of these is that global dollar adoption will make it harder for the U.S. government to rein in the fiscal profligacy that has led to a debt-to-GDP ration of more than 100%—a level unseen since the country was fighting on two fronts in World War II.

Ordinarily, market forces would force the federal government to exercise more financial discipline. But if stablecoins fuel a growing overseas demand for dollars, Silbert fears U.S. politicians will continue to resort to loose monetary policy.

“I’m concerned about giving the U.S. government and Treasury the unlimited ability to print US dollars,” said Silbert. “Over time, governments destroy their currency again and again.”

This story was originally featured on Fortune.com