- Bessent said that stablecoin issuers, particularly those backed by US Treasuries, could evolve into notable buyers of government securities
- He believes that the implementation of the GENIUS Act is a win-win-win situation for everyone involved, including stablecoin users, stablecoin issuers, and the US Treasury Department
- In June, Bessent conservatively estimated that the stablecoin demand for Treasuries could reach $2 trillion
US Treasury Secretary Scott Bessent has pointed out the rising influence of the stablecoin industry in addressing the country’s escalating government debt, as reported by Financial Times.
He highlighted how stablecoin issuers, particularly those backed by US Treasuries, could evolve into notable buyers of government securities, providing a new funding channel for debt financing.
Bessent has also been in talks with major stablecoin companies like Tether and Circle regarding their holdings of government debt.
The newly passed GENIUS Act mandates that US dollar-pegged stablecoins be fully backed by secure assets such as short-term Treasury bills. The goal is to provide both regulatory clarity for the stablecoin industry and a new source of fiscal utility for the government.
Related: U.S. Treasury Clarifies Position on Strategic Bitcoin Reserve Plans
A few days ago on X, while mentioning the GENIUS Act, Bessent stated that “stablecoins will expand dollar access for billions across the globe and lead to a surge in demand for US Treasuries, which back stablecoins.”
He believes that the implementation of the GENIUS Act is a win-win-win situation for everyone involved, including stablecoin users, stablecoin issuers, and the US Treasury Department.
In June, Bessent conservatively estimated that the stablecoin demand for Treasuries could reach $2 trillion, with optimistic projections hitting as high as $3.7 trillion by the end of the decade. To put things in some perspective, Tether (USDT) already holds over $100 billion in Treasury bills, making it one of the largest non-sovereign buyers globally.
Stablecoins as a global dollar anchor
Bessent believes stablecoins can help the US dollar stay strong globally by making it more useful for everyday financial tasks.
Stabilizing demand from stablecoin issuers could lead to lower short-term yields, ultimately reducing the government’s borrowing costs. Still, analysts caution this might challenge the Fed’s rate-setting flexibility and liquidity in Treasury markets.
Related: Stablecoin Valuation Hits $281 Billion: Here are the Biggest Beneficiaries
As traditional holders of US debt like China have reduced their holdings over time, stablecoin issuers are in a position to help fill this demand gap. Subsequently, they could help the government keep its borrowing costs low and its financial situation more stable.
Whether this vision plays out as smoothly as Bessent hopes remains to be seen, but the potential role of stablecoins in shaping the next chapter of the US dollar will likely be hard to ignore.
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Source: https://coinedition.com/us-treasury-secretary-makes-stunning-admission-on-stablecoins-and-national-debt/