Extending U.S. Dollar Dominance in the Digital Era: The Case for an Austin USDC Payroll Pilot
A government-backed USDC payroll pilot in Austin could become a strategic showcase for the next generation of U.S. dollar dominance. By introducing a regulated USD stablecoin into everyday payroll and payments, the U.S. can extend the reach, speed, and compliance strength of its currency—without replacing it.
Learn More About the Pilot
Executive Thesis
Goal
Keep the USD the world's default settlement unit by upgrading it to internet speed via a regulated USD stablecoin rail.
Method
Launch a government-endorsed Austin payroll and payments pilot where employers pay 10% of payroll in USDC and key local entities—including state and local tax offices, utilities, and landlords—accept and recycle USDC.
Strategic Payoff
Faster, cheaper cross-border USD flows; expanded financial inclusion; and deeper USD network effects, now programmable and global.
What's in It for the U.S.
Preserve Dollar Hegemony
Ensure the USD remains the unit of account as the world's payment systems digitize.
Compete with CBDCs
Provide a market-driven, U.S.-regulated alternative to e-CNY and other central bank digital currencies.
Enhance Trade & Remittances
Enable programmable USD for instant business-to-business and peer-to-peer cross-border payments, reducing friction compared to correspondent banking.
Boost Compliance
Embed KYC/AML and sanctions at the protocol level, making it harder for illicit offshore systems to compete.
Drive Innovation & Jobs
Encourage U.S. companies to develop the wallets, APIs, POS systems, and gateways for a global programmable dollar.
Pilot Design: The "Austin USD(x) Loop"
Participants:
  • 10–20 tech employers
  • 3–5 mid-size landlords or HOAs
  • City utility + 1–2 telecoms
  • 20–50 independent grocers/restaurants
  • State and local tax offices (assumed willing)
Flow of Funds:
10% payroll → employee wallets → rent, utilities, groceries, transit, city fees → tax remittance/refunds → vendors/suppliers → back to employers.
Guardrails:
Only USD stablecoins meeting reserves, attestation, and redemption standards, with wallets/providers operating under BSA/AML compliance.
Federal & State Policy Levers
Signal
Issue a Treasury/White House policy statement declaring fully reserved USD-pegged stablecoins as a strategic asset.
Standards
Define rules for reserve quality, audits, redemption timelines, asset segregation, and operational risk management.
On-Ramps
Clarify that split payroll (USD + USDC) is legal with employee opt-in and wage compliance.
Taxes & Fees
Texas and Austin accept stablecoin payments (assumed), offering 1% incentive credits for compliant rails.
Procurement Pilots
Allow small-scale federal/state disbursements (rebates, refunds) in USDC.
Regulatory & Safety Framework
Consumer Protections
Clear disclosures, refund processes, and prohibition of reserve rehypothecation.
Supervision
Federal oversight of reserves, state MSB licensing where required, and travel-rule compliance.
Cybersecurity
Mandatory MPC/HSM key management, incident reporting, and continuity planning.
Data Privacy
Limit transaction data retention, with safe harbors for compliance use.
International & Cross-Border Impact
Global Dollar Reach
Allow overseas contractors and merchants to invoice in USD (USDC) with near-instant settlement.
Allies First
Establish bilateral regulatory sandboxes with key partners to align KYC/attestation.
Remittance Efficiency
Reduce costs and delays while keeping flows denominated in USD.
Messaging for Policymakers
"We're not replacing the dollar—we're extending it."
"Programmable dollars make American money the default rail of the internet."
"Same dollar, fewer middlemen, faster settlement, stronger compliance."
Success Metrics

These metrics will be tracked throughout the pilot to measure success and identify areas for improvement.
Phased Rollout
1
0–90 days
Policy signal, standards finalized, issuer and merchant onboarding, test tax remittance.
2
90–180 days
Public launch, monthly dashboards, cross-border corridors to Mexico and the Philippines.
3
180–360 days
Expand merchant base, integrate insurers, healthcare, and tuition payments; explore federal disbursement pilots.
Risks & Mitigations
Peg/Issuer Risk
Multi-issuer allow-list, real-time attestations, circuit breakers.
Regulatory Drift
Inter-agency steering committee, sandbox flexibility.
Illicit Finance
Compliant endpoints, on-chain analytics, tiered KYC.
Consumer Harm
Opt-in only, USD default option, fee caps, dispute resolution.
The Ask
Policy Statement
Endorse fully reserved, attested, redeemable USD stablecoins as strategic infrastructure.
12-Month Pilot
Authorize Austin's USDC payroll and payments trial with tax acceptance and incentives.
Inter-Agency Sandbox
Treasury, Fed, OCC, CFPB, DHS, and Texas to co-supervise with quarterly reporting.
Cross-Border Green Light
Launch with at least two allied regulators for remittances and contractor payments.