01.06.2025
The Digital Upheaval
How Trump Uses USD1 to Reshape the Global Financial
Klaudia Grote
01.06.2025
The Digital Upheaval
How Trump Uses USD1 to Reshape the Global Financial
Klaudia Grote
Jun 01, 2025
The Digital Upheaval
How Trump Uses USD1 to Reshape the Global Financial System – and How Democracies Must Respond
"Nothing is more powerful than an idea whose time has come."
(Victor Hugo)
For the past five months, the US dollar has been steadily losing value—a remarkable decline of 8.4 percent (as measured by the US Dollar Index) since Donald Trump assumed office in January 2025 (1). International financial markets are growing increasingly nervous in response to Trump’s authoritarian style of governance, characterized by an aggressive tariff policy, presidential decrees aimed at digital transformation, deep interventions in the social order, and a geopolitically destabilizing foreign policy. The tech sector has been particularly hard-hit: companies like Nvidia, Meta, and Apple have lost hundreds of billions of US dollars in market capitalization since the beginning of the year (2). This trend reflects a structural uncertainty in which future-oriented technology markets are no longer seen as stable, especially when they become entangled in political power plays.
Amid these tectonic shifts, Donald Trump is deploying a new digital stablecoin called USD1—a cryptocurrency pegged to the US dollar, yet not controlled by the Federal Reserve, but rather by private entities and institutions closely aligned with him, such as World Liberty Financial Inc. (3). This construction raises fundamental questions about national sovereignty, the role of private actors in monetary systems, and the future configuration of global currency relations.
Trump’s aim seems to go far beyond merely introducing a new means of payment. USD1 functions as a digital lever to establish an alternative reserve currency, serving not only the geopolitical repositioning of the United States but also, at least hypothetically, a strategy for partial debt relief through monetary restructuring. Comparable to the so-called “Nixon Shock” of 1971, which severed the US dollar’s link to gold, this envisioned “Trump Shock” could involve decoupling USD1 from the classical US dollar and selectively revaluing sovereign debt (4). Initially, such a move might be met with criticism, but not necessarily perceived as a fundamental crisis—more likely interpreted as a pragmatic response to economic constraints. The US dollar maintained its dominance in the past, largely due to the petrodollar system introduced in 1973, which tied global oil trade to the US currency, and due to the absence of viable alternatives in the international financial system.
However, the conditions surrounding USD1 would be fundamentally different: this new currency would not derive its legitimacy from institutional trust, but from political power and presidential coercion. If a US president were to issue a decree mandating, for example, that tax payments, social transfers, or government contracts be conducted exclusively in USD1, it would amount to an authoritarian currency reform, bypassing parliamentary oversight while exerting massive influence on the domestic economy and international trade. Such measures would be based not on trust, but on rule-setting through power, and could foster economic polarization between beneficiaries and the excluded. The danger lies in USD1 being perceived not as a stable reserve currency, but rather as a politicized instrument of coercion wielded by an unpredictable power center.
If USD1 were to be fully established as an independent digital currency and then decoupled from the traditional US dollar—meaning it would no longer be redeemable at a 1:1 ratio—its market value could potentially rise under certain conditions. This would not constitute a disruptive break in the classical sense, but rather a gradual system reform—a “silent reformation” of the global monetary order.
Is such a scenario even realistic? How could a president artificially increase the value of a stablecoin—and how would this differ from traditional currency or fiscal policy measures?
Unlike central bank-led monetary policy or fiscally anchored decisions secured by parliamentary approval, such a step would entail direct executive intervention in monetary processes, bypassing monetary institutions and potentially causing irreversible consequences for the monetary sovereignty of the United States.
The answer lies not in technological innovation but in exercising presidential power. Through targeted restructuring—such as dismissals, strategic appointments, and the erosion of independent agencies—Donald Trump has gained control over key executive bodies, including the Treasury Department, the Internal Revenue Service (IRS), and parts of the social welfare administration. On this basis, he could issue a series of presidential executive orders mandating that all government transfer payments, subsidies, and agency transactions—up to a certain threshold—be carried out exclusively via USD1.
Legislation could also be introduced to mandate the acceptance of USD1 for tax payments, fines, or administrative fees, giving stablecoin legal standing and competitive market advantages.
Even more consequential would be targeted tax incentives for businesses or investors that process their financial transactions using USD1. If this were accompanied by the creation of new financial instruments, such as USD1-based government bonds or infrastructure funds, the stablecoin’s market capitalization could rapidly grow into the tens or even hundreds of billions (current public estimate: approximately USD 2.1 billion (5)).
What may appear, on the surface, as an innovative step toward a digital financial architecture would, in practice, be a controlled capital transfer—away from the traditional banking system and the existing dollar regime, toward a presidentially managed monetary channel with its own governance model and restricted access points.
But would the opposition even allow such a move? And would it be legal?
The legal situation is complex and largely uncharted territory. Democrat-led states such as California or New York could file constitutional lawsuits—arguing, for instance, that bypassing Congress violates separation of powers, that the Federal Reserve’s currency monopoly is being undermined, or that presidential emergency powers are being abusively expanded. Such lawsuits would be legally plausible, but slow-moving. And therein lies the risk: Trump could create facts on the ground. For example, through pilot contracts with federal agencies, initial tax receipts in USD1, or the launch of a state-backed digital wallet system that integrates USD1 as a preferred payment method into everyday transactions.
Parliamentary resistance is also conceivable, such as withholding budget allocations for digital infrastructure or introducing counter-regulations in Congress. However, given the current balance of power—whether due to Republican majorities, Democratic infighting, or institutional gridlock—this path also remains politically uncertain.
At its core, however, this debate conceals a much deeper problem: the structural over-indebtedness of the United States—a challenge shared by many Western industrialized nations. A proposal that appears to offer a way out, such as a digital currency mechanism that either devalues old dollar-denominated debt or substitutes it with USD1, might initially seem like a liberating strike: unorthodox, but practical.
If the democratic opposition fails to present a compelling and justice-oriented answer to the debt issue, a global solution that does not merely protect the wealthy while shifting the burden onto the shoulders of the vulnerable, Trump’s proposal will remain dangerously appealing. In the absence of a credible counter-model, the law of the strongest prevails—and that erodes global trust in democratic systems.
That is precisely why it is urgent for international economists, multilateral institutions such as the IMF or the G20, and democratic governments to work together on a plan for fair, transparent, and global debt restructuring, without authoritarian shortcuts and without concentrating digital power in the hands of a single actor.
Because if this debate is postponed, buried, or depoliticized through technocratic rhetoric, we leave Trump with a monopoly on the answer—a monopoly built not on justice or democracy, but on power, control, and self-interest.
It is, in fact, almost unfathomable: A former president facing multiple criminal indictments—including charges related to an attempted coup—could, with the help of a privately backed stablecoin, not only consolidate political control but also personally enrich himself on a massive scale. USD1 is not just another cryptocurrency—it is a potential global leverage instrument, born in a vacuum of vision and leadership.
That a single man could build a digital financial vehicle with global implications for currencies, nation-states, and democratic systems would have been dismissed as dystopian fiction just a few years ago. But much of what is now reality was once considered a red line: Trump’s election victory in 2016, his systematic erosion of the rule of law, the capitulation of large parts of the Republican Party—and finally, the January 6th insurrection, orchestrated through lies and manufactured outrage.
Today, we are witnessing a slower but deeper erosion of democracy—a process that unfolds quietly, algorithmically, veiled in economic discourse. In this context, USD1 is not just an economic experiment; it is the next tool for dismantling democratic oversight.
Trump will undoubtedly be able to offer his base—and potentially even parts of the economic center—a new narrative: that his digital financial policy is not an authoritarian overhaul, but rather a long-overdue modernization. A rationalization of the state, a bypass of “inefficient elites,” a direct money system for the people.
And perhaps—dangerous as it may sound—some Democrats may see it as a pragmatic opportunity to reform the outdated U.S. debt regime. At first glance, it may seem about “technical efficiency” and “economic policy flexibility.” But this depoliticization is the danger: when systemic transformation is disguised as a technological upgrade, the age of undemocratically legitimized instruments of power begins.
One must not underestimate that this rhetoric of pragmatism is a hallmark of authoritarian seduction (6). As soon as stability, efficiency, and simplification are prioritized over democratic control and deliberation, the institutional order erodes.
USD1 is not a neutral means of payment—its creation, control, and governance are politically charged. It is the product of a power narrative, introduced in a way that systematically circumvents classical principles of liberal democracy: separation of powers, the rule of law, and public accountability. Anyone who buys into this system risks legitimizing an authoritarian transformation project that undermines the very foundations of democratic governance.
Trump’s most powerful tool is not the technology itself, but the psychological logic of the deal. His worldview follows a simple principle:
“It would be stupid to turn down a jet.” (7)
And that’s precisely how he would pitch USD1: It would be irrational to keep servicing old debt with interest when it could be “neutralized” through a new digital system. This narrative blend of economic pragmatism and personal enrichment has enormous seductive power. Even among Democrats, voices may emerge describing USD1 as “efficient,” “practical,” or “modern”—while failing to see that it’s not about efficiency, but about control.
Under the guise of economic rationality, Trump would build an authoritarian parallel regime, disempowering classical institutions to exercise direct power via digital infrastructures.
Anyone joining this system, out of political opportunism or economic utilitarianism, becomes part of the problem. Even if they believe they are merely acting “pragmatically.”
Therefore, the role of public education and civil society mobilization is even more crucial. USD1 could quickly become a symbol of authoritarian transformation—a “TrumpCoin” serving as a digital lever for control, exclusion, and politically orchestrated financial flows. It is up to NGOs, critical media, legal experts, and tech activists to expose this dynamic and design alternative infrastructures.
One conceivable response could be establishing parallel payment systems at the state level, particularly for distributing social benefits or managing digital administrative services. California, for example, has previously piloted innovative e-government platforms and digital identity solutions. In an emergency scenario, a token-based social benefits system could be developed. New York also has the technological capacity to implement municipal tax and transfer models that could be decoupled from a centralized USD1 system.
But why should Americans resist Trump’s financial policies at all?
The world needs a sustainable, fair, and stable solution—not only for itself but also for the United States. In the long term, a new global reserve currency must be developed—one that is not hegemonically dominated but multinationally organized. As early as the Bretton Woods negotiations in 1944, economist John Maynard Keynes (8) proposed the creation of a “Bancor”—a neutral unit of account whose value would be based on global trade volumes and total global economic output.
The United States then prevailed with the dollar as the global anchor currency. But today, as even Donald Trump complains about this role—
“They ripped us off for many, many years.” (9)
—There may be a historic opportunity to reopen this debate. One potential solution could be a digitally supported, decentralized reserve unit whose value is pegged to global GDP on a weighted basis—a kind of Multinational Token Unit. It would not belong to any single nation-state but be governed under a multilateral model, for example, under the auspices of the IMF, G20, and a democratically reformed Bank for International Settlements (BIS).
The United States could be relieved of the “burden of hegemony”—without plunging the world into authoritarian instability. At the same time, the international community would gain the opportunity to collectively and democratically decide how to reduce global debt, stabilize currencies, and restructure the international financial system in a just, transparent, and future-proof way. Only if democracies offer viable alternatives—in content, structure, and emotionally- as narratives and frameworks of meaning can they remain credible in the competition with authoritarian temptations.
The legal and political powers Trump is drawing on are not hypothetical. During his first term, he extensively used executive authority, for example, through Executive Order 13873 (2019) (10), which allowed the government to ban foreign providers of digital infrastructure on national security grounds (11). With Executive Order 13959 (2020), he prohibited U.S. investments in Chinese companies linked to the Chinese military (12). He also invoked Section 232 of the Trade Expansion Act of 1962 to intervene in trade and tariff policy under the pretense that economic interests were national security matters (13).
These actions demonstrate that Trump has already shown how to bypass existing institutions using a permanent emergency and executive decree logic. And the current legal landscape does not make it harder for him, on the contrary. With the so-called Genius Act, passed in 2024, his administration created a legal framework to implement digital state innovations via executive order. In parallel, the Digital Transition Executive Order was signed, mandating that, as of September 30, 2025, all government payments, tenders, and transfers must be processed digitally. This measure is the gateway to USD1, enabling the executive branch to establish digital currencies as the default infrastructure for public financial processes.
If democracies fail to provide a just and structurally sustainable answer to the global debt crisis, they lose the economic and moral argument. A credible alternative to the current debt spiral must be urgently developed through a worldwide restructuring architecture incorporating social and ecological dimensions (14).
Those who counter Donald Trump with moral protest alone concede to him the power to define the problem and its solution. And that is precisely the danger: failure to articulate alternatives makes the authoritarian narrative appear inevitable.
The European Union must not stand idly in the face of what may be a direct attack on the global monetary system. If USD1 is established as an authoritarian parallel currency system, it would not merely constitute a domestic U.S. experiment but a direct assault on the principles of multilateral financial architecture. Beyond that, several strategic responses would be possible.
The EU could begin by clearly stating its position in international institutions such as the International Monetary Fund (IMF), the World Bank, or the World Trade Organization (WTO)and pushing for Trump’s actions to be classified as an abuse of monetary power (15).
Strengthen the euro as an international anchor and settlement currency—by promoting a European stablecoin project (e.g., the “E-Euro”), issuing euro-denominated bonds via multilateral development banks, and concluding bilateral trade agreements in euros.
Expand strategic alliances, especially with states that oppose a Trump-dominated financial order. These could include traditional democracies like Japan, Canada, or Australia, and new partnerships with BRICS+ countries open to rules-based cooperation.
Build a sovereign digital payments infrastructure—including a European alternative to SWIFT, blockchain-based settlement networks, and mandatory data localization for critical financial transactions within the EU.
Regulate entities intending to use USD1 within Europe, particularly in finance, healthcare, or infrastructure sectors. The EU could influence this through market access rules, licensing regimes, and data protection regulation by adjusting the MiCA regulation, DSA/DMA, or EU anti-money laundering laws.
With such a strategy, Europe would demonstrate that it is not merely reacting to authoritarian threats but actively shaping a democratic, sovereign, and resilient financial future.
The rest of the world will also need to take a stand. A global counter-alliance will likely become inevitable in the medium term. However, multilateral formats like BRICS+ currently do not offer a reliable alternative, lacking transparent, rules-based, and democratically legitimate cooperation.
A credible counterweight to USD1 can only emerge from an economically robust, institutionally stable, and legitimate alliance, perhaps via a united G20 front or a coordinated coalition of democratic central banks.
If Trump indeed launches the digital transition of the U.S. financial system on September 30, 2025, the global community must be prepared. One option: the G20 summit could be moved forward to August 2025, convened as a worldwide crisis summit on monetary order. Under its presidency, South Africa would be authorized to initiate such an extraordinary session (16). Even without U.S. participation, which is already in doubt, a G19+EU special format could convene.
The goal: a coordinated strategy against digital coercion, capital displacement, and institutional power abuse.
In parallel, the central banks of the G20 could define a joint action framework:
Common standards for digital token issuance
Countermeasures against USD1 enforcement in third countries
Creation of an international clearing mechanism based on state-backed digital currencies (e.g., e-euro, e-yuan, yen, rupee, real) (17)
Additionally, the EU could build an alternative payment and value alliance with partners such as Japan, South Korea, India, Australia, and Canada—not as an anti-dollar bloc, but as a pro-democratic infrastructure for digital financial stability.
Europe must proactively develop a model for economic sovereignty, digital transparency, and rule-based cooperation. Only then will the rule-based order of the 21st century have a viable future. Critiquing authoritarian systems is not enough—democracies must be capable and constructive.
The idea of a multilateral, fair world reserve currency—perhaps in the form of a digital, GDP-weighted unit of account, governed by an independent, non-state-dominated body—may sound visionary today. Yet it represents a realistic corrective to the growing instrumentalization of currencies as geopolitical weapons (18).
A joint, globally legitimate debt resolution framework would not only neutralize USD1's seductive power—it could sustainably strengthen the resilience of open societies. If this historic opportunity is missed, the world risks far more than economic disruption: it risks a spiral of trade wars, currency instability, and geopolitical bloc formation, with potential consequences for world peace itself.
But precisely where destructive systems like USD1 aim solely to secure profit and power, there also lies the opportunity for transformation. The foundations of peace could be renewed through new alliances and fair financial structures. Trump's suspected strategy could—ironically—become a catalyst for a global debate: What should a just, future-oriented financial system look like—one that is not driven by narrow interests, but by shared responsibility?
A supranational digital currency model with transparent, tech-neutral, and democratically controlled governance is not a utopia. The building blocks already exist. The real question is not whether it can be done, but whether the global community is willing to set aside short-term national interests in favor of long-term stability.
Bibliography
· International Monetary Fund (2024): Global Financial Stability Report. Washington, D.C.
· Bank for International Settlements (2023): Central Bank Digital Currencies: Motivations, economics and design. BIS Papers No 122.
· U.S. Government (2024): The Genius Act – Legislative Text. WhiteHouse.gov (retrieved April 2025).
· U.S. Government (2024): Phasing out Paper Checks. (retrieves June 2024) https://www.whitehouse.gov/fact-sheets/2025/03/fact-sheet-president-donald-j-trump-modernizes-payments-to-and-from-americas-bank-account/
· Trump, D. (2024): Digital Transition Executive Order. Executive Orders Archive, Federal Register.
· Keynes, J. M. (1944): Proposals for an International Clearing Union. Bretton Woods Conference Documents.
· Brown, J. K. (2019): How Trump Undermined the Dollar. The Atlantic, December 2019.
· World Liberty Financial (2025): USD1 Whitepaper. Internal Documentation, retrieved via leaks.
Footnotes
1. See Wallstreet Online. Link: https://www.wallstreet-online.de/nachricht/19408968-fuenfter-verlustmonat-folge-devise-krise-us-dollar-haben.
2. See quarterly reports from Meta (Q1 2025), Nvidia (Q1 2025), Apple, and market analyses from Goldman Sachs, JPMorgan, or Statista.
3. According to public information, USD1 was issued in March 2025 by World Liberty Financial Inc., with close personnel ties to Trump. See corporate records, media reports, or interviews (Mark Moss, Stephen Miran).
4. Cf. Barry Eichengreen: Exorbitant Privilege..., Oxford University Press, 2011. Also, Daniel Yergin: The Prize..., Free Press, 1991 – on the Petrodollar system.
5. According to CoinMarketCap, Binance listing, or World Liberty Financial Inc., the current market cap of USD1 is about USD 2.1 billion (as of May 2025).
6. Cf. Hannah Arendt: The Origins of Totalitarianism. Piper, 2001.
7. This figure paraphrases Trump’s often-used deal logic: “If someone offers a good deal, I’d be stupid to refuse.” See NYT, 27.09.2016.
8. Cf. Skidelsky, R.: Keynes: The Return of the Master. Penguin, 2009. See also IMF Archives – 'The Keynes Plan vs. The White Plan' (1943–44).
9. Trump quote at G7 Summit 2018; CNN Politics, 09.06.2018: “Trump says U.S. allies treat America like a 'piggy bank'.”
10. Executive Order 13873 – Securing ICT Supply Chain, 15 May 2019. Link: https://www.federalregister.gov/documents/2019/05/17/2019-10538
11. Executive Order 13959 – Sanctions against Chinese military companies, 12 Nov 2020. Link: https://home.treasury.gov/...
12. Trade Expansion Act of 1962, Section 232—Trump used this Section for steel/aluminum tariffs. CRS Report R45249, 2020.
13. Guiding and Establishing National Innovation for U.S. Stablecoins of 2025. Link: https://www.congress.gov/bill/119th-congress/senate-bill/394/text
14. See UNCTAD, G77, Jubilee Debt Campaign proposals for debt mechanisms linked to climate/development. Cf. Stiglitz, The Great Divide, IMF WP/21/267.
15. Cf. EU role in IMF Board and vote weights in multilateral institutions. European Commission (2020): The European Economic and Financial System..., COM(2021) 32 final.
16. G20 Presidency 2025: South Africa chairs. See G20.org or AU briefings.
17. Cf. BIS Innovation Hub (2023–2025): Cambridge, Dunbar, Jura – China, UAE, BIS, EU cooperation.
18. See IMF (2022), The Future of the SDR: Reform Options; and UNCTAD policy briefs on de-dollarization.