A new Bitget Wallet research article has mapped how custody of the dollar has moved for seventy years, from London’s offshore banks, to fintech databases, to today’s stablecoin issuers and self-custodial wallets.
That story starts with a version of the dollar that never quite lived in America: the eurodollar. Some argue the eurodollar, not the dollar most people know, is the real global reserve currency.
The term traces back to a single bank’s telex address: in the 1950s, Soviet and Eastern European states, wary of holding dollar reserves inside American jurisdiction where they could be frozen, moved those funds to European banks instead, including Banque Commerciale pour l’Europe du Nord in Paris, whose telex code read “Eurobank.” The nickname stuck, and over time it came to describe any dollar held outside the United States.
London played a decisive role in the development of eurodollar. After the 1956 Suez crisis, tighter exchange controls pushed banks to lend out offshore dollar deposits instead. What began as a way to hold dollars outside the United States evolved into a credit market of its own.
One of the key drivers behind the eurodollar market’s expansion, from millions to trillions, was relatively low interest rates in the United States, which reduced the incentive for offshore dollar holdings to return to the US.
From that point, two parallel shifts began to unfold.
One involved the institutions that carried the dollar’s credit, moving from bank ledgers to fintech platforms and eventually to stablecoin issuers. The other involved the relationship between users and their money, gradually shifting from full reliance on institutions to full control of your assets.
Despite these changes, three features remained constant. The dollar continued to expand outside the United States, its final settlement always traced back through the American system, and the entity managing an account was not always the one ultimately responsible for repayment.
At the center of it all was a simple question: who actually owes you a dollar?
1. The Dollar Leaves America
When dollar deposits moved from New York to London, the currency itself did not change. What changed was the party responsible for honoring it.
London banks soon realized they could do more than hold deposits. By issuing loans, they could create new dollar balances. As long as those balances were accepted in the market, they functioned as dollars.
Milton Friedman later described this process as the work of “a bookkeeper’s pen.”
The expansion was driven in part by regulation. US rules capped deposit rates, while London banks could offer higher returns, attracting funds. Economic historian Catherine Schenk found that London’s Midland Bank took in roughly $49 million in 30-day dollar deposits in a single month in June 1955, pulled in simply by offering better rates than its American counterparts. Over time, this gap allowed offshore dollar markets to grow rapidly.
By the 1960s and 1970s, the scale had shifted dramatically. Offshore dollar deposits grew from around $1 billion to tens of billions, eventually reaching trillions. Today, dollar credit outside the United States exceeds $14 trillion.
But even as this system expanded, it carried an underlying limitation.
Offshore banks could create dollar-denominated claims, but they could not create Federal Reserve reserves. When those claims needed to be settled in real dollars, the system still depended on US clearing infrastructure.
The dollar had moved beyond America’s banking system, but not beyond its settlement system.
2. Three Crises, Three Layers of Power
In normal conditions, different forms of dollars appear interchangeable, whether held in a bank in Paris, a bank in New York, or as physical cash. Few people consider the complex systems behind them or who ultimately backs them before they reach your hands. It is only during a crisis that these differences become visible.
Clearing Power
On June 26, 1974, the collapse of Germany’s Herstatt Bank exposed a critical risk in the global financial system. Traders had already delivered marks to Herstatt Bank in Frankfurt and were waiting to receive the corresponding dollar payment in New York when German regulators shut the bank down during local business hours, hours that still fell before the trading day had opened in New York. As a result, payments that had already been initiated were never settled.
This became known as Herstatt risk, a term still used today. The event highlighted a fundamental issue: what participants held was not cash, but a promise. Issuing a dollar claim does not guarantee delivery; final settlement depends on the systems that clear and complete payments.
Lender-of-Last-Resort Power
During the 2008 financial crisis, European banks held large volumes of dollar-denominated assets but relied heavily on short-term funding rather than stable dollar deposits. When markets froze after the collapse of Lehman Brothers, lenders stopped rolling over funding, leaving these banks unable to access the dollars needed to meet their obligations.
This created a global “dollar shortage,” as institutions holding trillions in dollar assets struggled to secure actual cash. The Federal Reserve stepped in through central bank swap lines, supplying dollars to foreign central banks, which then passed liquidity to local banks. At its peak in December 2008, these swap lines reached about $583 billion, highlighting the Fed’s role as the ultimate backstop.
The lesson was blunt: banks could create dollar claims through lending, but only the Fed could provide the hard dollars required for final settlement in times of stress.
Pricing Power
London banks also shaped global dollar funding costs through LIBOR, a benchmark built from the rates banks reported for themselves. At its peak, hundreds of trillions of dollars in loans, bonds, and derivatives were tied to it, effectively giving London banks the power to price dollar funding worldwide.
However, this system carried a critical flaw: it relied on self-reported estimates rather than actual transactions. When manipulation scandals emerged, that weakness was exposed, with banks like Barclays paying hundreds of millions in fines.
LIBOR was eventually replaced by SOFR, a benchmark based on real repo market transactions, and by June 2023, US dollar LIBOR was fully phased out.
Together with earlier crises, this shift revealed a broader pattern. Offshore markets could expand dollar credit, but they never held lasting control over clearing, crisis liquidity, or pricing power itself.
3. The Dollar Account Moves Into Software
Over the past decade, fintech has transformed how people access dollars by compressing traditional banking functions into mobile apps. Opening accounts, converting currencies, and sending money across borders, once slow and paperwork-heavy, can now be done in minutes. The entry point to a dollar account has shifted from the bank branch to a software interface.
Platforms like Revolut and Wise appear similar on the surface, offering multi-currency accounts, transfers, and card payments. But the structures behind them differ significantly. Revolut has moved toward becoming a licensed bank in certain jurisdictions, meaning some user balances qualify as insured deposits. Wise, by contrast, operates as an e-money provider, holding customer funds separately rather than taking them onto its own balance sheet.
This distinction matters in moments of stress. In one model, funds are backed by deposit insurance and banking regulation; in the other, recovery depends on how segregated funds are managed and how smoothly insolvency processes unfold.
Despite these differences, both systems share a common limitation: the account ultimately sits within the institution’s own database. Users interact through an app, but control over accounts, transfers, and withdrawals remains with the platform. What users hold is a contractual claim, not direct ownership of the underlying funds.
Fintech changed how people access the dollar, but not who controls it. It redesigned the interface without altering custody, and that is where stablecoins and self-custodial wallets begin to matter.
4. Stablecoins: The Dollar Moves Onto a Public Ledger
Stablecoins do not eliminate the need for trust or backing. Instead, they separate two functions that were previously tied together: redemption and transfer.
The redemption side remains firmly within traditional finance. Stablecoin issuers back their tokens with reserves, primarily US Treasuries and bank deposits, and final redemption still depends on the existing financial system.
The transfer side, however, is fundamentally new. Dollar balances can now move directly across a public blockchain, without relying on any single institution’s internal ledger. What was once a database entry inside a bank has become a token that can circulate freely between wallets, exchanges, and onchain applications.
In that sense, stablecoins extend the evolution of offshore dollars. The eurodollar shifted dollar balances from New York’s ledger to London’s. Stablecoins go a step further, moving them onto a shared ledger that no single institution controls.
The demand driving this shift is not new. Individuals, businesses, and global workers have long sought access to dollars for savings, trade, and payments, often facing barriers such as capital controls, high fees, and slow banking processes. When traditional systems cannot meet that demand efficiently, alternative structures emerge.
Despite this shift, stablecoins remain closely tied to the broader dollar system. Their reserves are held within it, and redemption ultimately depends on it. Rather than weakening the system, stablecoins expand its global distribution, effectively extending the reach of dollar assets and US Treasuries.
As of July 2026, stablecoins held a total market value of about $312 billion and processed roughly $33 trillion in onchain transactions in 2025. Major issuers also hold significant exposure to US government debt, with Tether alone holding around $141 billion in US Treasuries.
Unlike the eurodollar system, which expanded through bank lending and balance sheet risk, stablecoins largely redistribute existing dollar assets with backing in cash and short-term Treasuries. Their transfer mechanism is also distinct, settling directly onchain rather than through correspondent banking networks.
As with previous phases of offshore dollar growth, regulation has followed. Authorities are defining who can issue stablecoins, how reserves must be held, and what rights users have in a failure scenario. In the United States, the 2025 GENIUS Act goes a step further by establishing clear rules for stablecoin issuers, including reserve requirements and bankruptcy protections that prioritize holders’ claims on underlying assets.
5. Self-Custody and Control
The final shift concerns control.
Traditional financial systems, whether banks, e-money platforms, or custodial services, all follow the same structure: users deposit assets, and the institution records and manages the balance on their behalf. Access to financial services depends on that relationship.
Self-custodial wallets change this model. A wallet like Bitget Wallet does not take deposits or create balances within its own ledger. Instead, assets remain onchain, and control is determined by ownership of the private key. The wallet simply provides the tools to interact with the blockchain, including key management, transaction signing, and access to services.
This shifts the structure of financial access. Instead of first handing assets to an institution and then using its services, users can now hold and control assets directly and connect to services afterward. The same address can be accessed across different wallet applications, as long as the private key is retained.
Redemption and control had always traveled together. Here, for the first time, they split. Stablecoin issuers remain responsible for redemption and the underlying reserves, while self-custodial wallets determine who can move and control the asset.
For the first time, financial services and asset custody are no longer tied together. Payments, trading, and yield generation can exist without requiring users to transfer ownership of their assets to a platform.
This marks a structural shift. Earlier systems changed how people accessed dollars, but control remained with institutions. Self-custodial wallets break that pattern by allowing users to retain control while still participating in a full range of financial services.
Conclusion
Over decades, the dollar has moved across different systems, from bank ledgers in New York, to offshore markets in London, to fintech platforms, and now to public blockchains.
The institutions carrying it have changed, but the underlying promise has remained.
What has shifted most recently is not the credit relationship itself, but control.
A stablecoin still depends on an issuer to honor redemption. But once it is held in a self-custodial wallet, control over the asset no longer needs to sit with an intermediary.
The question of who owes a dollar remains.
For the first time, however, the account holding it does not have to belong to the debtor.
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