TLDR
- Trump officials are studying a US dollar stablecoin for Gaza recovery
- The token would not replace the Palestinian currency
- Gulf and Palestinian firms may support implementation
- USD1 briefly fell below its $1 peg before recovering
Trump officials are exploring a US dollar-backed stablecoin for Gaza as part of a postwar economic plan. The proposal aims to restore digital payments in a region with limited banking access.
The plan is under discussion within a US-led reconstruction framework. It would not introduce a new Palestinian currency but would support digital transactions in Gaza.
US Officials Review Digital Dollar Plan for Gaza
Officials working with Donald Trump’s “Board of Peace” are reviewing a dollar-backed stablecoin for Gaza. The idea is part of a broader economic recovery plan after the 2023 war. According to a Financial Times report, discussions remain at an early stage. The proposal would not create a new Palestinian currency. Instead, it would act as a digital payment tool in Gaza.
Banking systems in Gaza have faced heavy damage. Access to Israeli shekels has also been restricted. As a result, digital payments are being considered as an alternative channel.
Israeli tech entrepreneur Liran Tancman is reportedly advising the US-led reconstruction body. Officials from Gaza’s technocratic administration are also involved in discussions. The stablecoin would be pegged to the US dollar. Gulf Arab and Palestinian digital asset firms may assist with implementation and operations.
Digital Payments and Financial Access in Gaza
Supporters of the proposal argue that digital payments could reduce reliance on physical cash. Cash supplies have been limited since the conflict escalated. They also state that digital systems may help track funds and limit misuse. However, the plan faces technical and governance challenges.
Gaza continues to face power outages and limited internet coverage. Many areas rely on 2G networks, which may affect digital transaction speed. Critics warn that a Gaza-focused stablecoin could increase financial separation from the West Bank. Concerns also exist about oversight and regulatory control.
Officials involved in the talks have not announced a launch timeline. The proposal remains under review within the broader reconstruction agenda.
USD1 Briefly Loses Peg Amid Market Activity
The discussion comes as stablecoins face market scrutiny. USD1, a dollar-backed stablecoin, recently fell below its intended value. USD1 dropped to $0.994, about 0.6 percent below its peg. On some trading pairs, it reached $0.9802 USDT before recovering.
CoinGecko data later showed the token trading near $0.998. The drop occurred during increased trading volume and social media activity. WLFI, associated with USD1, stated, “It didn’t work.” The team said the redemption mechanism helped restore balance.
The company added that holders can redeem USD1 for US dollars. This mint and redeem structure is designed to maintain price stability.
Stablecoin Reserves and Market Position
USD1 is issued in partnership with crypto custodian BitGo. According to BitGo, reserves are backed one-to-one with assets. These reserves include short-term US Treasury bills and dollar deposits. The project reports monthly reserve attestations.
Consulting firm Crowe signs the attestation reports, based on company statements. The token’s market value stands at about $5 billion. USD1 ranks among larger dollar-backed stablecoins. However, it trails Tether’s USDT and Circle’s USDC in market share.
USDT trades near $1.0001, according to available data. Stablecoins are widely used for trading and transfers across exchanges. Even small price changes can trigger rapid activity. This can affect liquidity and trading behavior across markets.
WLFI said that no scammer could shake its long-term commitment to USD1. The team maintained that full backing and redemption access supported the peg. As Trump officials explore a dollar stablecoin for Gaza, market participants continue to monitor stablecoin stability and reserve transparency.
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