// If crypto currencies continue to rise, how might the US Government react?
// A 2045 possible future history
Crypto and decentralized finance (defi) grew in scale and popularity in the first half of the 2020s. As stablecoins like Tether grew in popularity, VCs poured money into startups, and ecosystems of crypto financial tools were built, the US Federal Reserve got nervous. The US Dollar had acted as the principal global reserve currency since the end of World War II, in part enabling America’s global hegemony. It was now under threat.
Key government leaders knew that it would be disastrous for the government to try to build its own cryptocurrency. But if the US ignored defi entirely, the US could find itself no longer in the economic driver’s seat, with potential catastrophic consequences for America.
The US faced a Thucydides Trap (a tendency towards war when an emerging power threatens to displace an existing great power), which is what led to the drafting of the now infamous 2027 Presidential “GovCoin” Executive Order.
A mere 3 pages, it massively transformed the world in a way comparable to section 230(c)(1) of the US Communications Decency Act or Roosevelt’s Executive Order 6102
The “GovCoin” Executive Order had a few key points:
In 45 days, the company Tether and all its assets would be nationalized
In 90 days, all cryptocurrencies and crypto assets would be considered financial securities, eliminating the crypto “wash sale” loophole. US Treasury and IRS would ramp up investigation and enforcement against crypto tax avoidance
In 180 days, all Tether coins would be converted into new USD Tokens
In 1 year, the USD Token would become the official digital currency of the United States, backed by the US government
The US Federal Reserve would run the centralized ledger of USD Token transactions, taking USD Token off the public blockchain
USD Token transactions would have a fixed transaction fee, set by the Fed, not a variable Ethereum GAS fee, starting at 2%. Of this transaction fee, 50% of the first 5 years of transaction fees would be dedicated for US infrastructure improvements.
USD Token transactions could be reversed in the cases of fraud, blackmail, extortion, and other malfeasance according to US law
The short term effects were predictable. A bomb went off in the social crypto world: Tweet after Discord post after TikTok video railed against US government’s move. Public hearings were held, and old US Senators asked meme-worthy questions. A bull run on Tether occurred as crypto holders attempted to convert their assets before the transition. Hundreds of sh*tcoins and memecoins dove straight to zero. Grifters and scammers tried to squeeze the last money out of the NFT-mania.
It took a few years for the longer-term implications of this systemic change to become apparent. Companies who wanted to do business with the US government began to offer USD Token payment services. New York financial institutions began incorporating USD Token into investment vehicles, including index funds, 401k allocations, and more. Block, Apple Pay, and other digital wallets incorporated USD Tokens, making it easier and easier for people worldwide to use.
China, having already banned crypto mining in 2021, doubled down on eliminating crypto usage by the population, going so far as to seize the assets of several prominent Party members due to their holding of USD Tokens. The EU decided to create a ‘EuroCoin’, but the process was still in the requirements gathering phase after 3 years, at which point the Swiss fully launched their own ‘SwissCoin’, with full integration into the Swiss financial system. After another 4 years, ‘SwissCoin’ effectively became the digital currency of the EU, despite not having official EU sanction.
As for other cryptocurrencies and stablecoins, while a handful of them survived the destructive entrance of the US Government, they found themselves under heavy scrutiny by major world powers. People and groups attempting to use non-govcoin crypto for darkweb transactions saw immutable blocktrain transaction histories scrutinized by regulators and amateur sleuths.
The vast reduction in usage of public blockchain crypto combined with the USD Token not requiring “Proof of Work” for transactions resulted in a significant reduction of the environmental impact of crypto’s usage. In fact, the USD Token transaction fees provided ‘free’ money to upgrade and green the US’s electrical grid, which came in handy when climate change hit the US hard in the 2030s.