Stablecoins & U.S. Debt (Scenario)
- BECTRA
- Jul 23
- 2 min read
1-) A stablecoin issuer is required to place the funds received (in exchange for its issued tokens) in:
cash, and
High-Quality Liquid Financial Instruments (HQLIs), including short-term U.S. Treasury securities (T-BILLS).
2-) Current U.S. stablecoin issuers hold T-BILLS, and future issuers will hold them as well.
3-) The more widespread U.S. stablecoins become, the larger the pool of (captive) buyers of T-BILLS grows.
This allows the U.S. government to significantly increase its debt—almost at will.
Elon MUSK has distanced himself from Donald Trump on the grounds that U.S. debt will only continue to grow (Reuters).
The U.S. Government has declared its intention to increase current debt levels (Voir ici).
How to boost U.S. debt financing : a scenario
It would be enough to push USD coin issuers to increase their T-BILL holdings, for example from 50% to 75%.
My table below displays the T-BILL allocation rates of Circle and Tether.io.CIRCLE held 41% in Treasuries as of end-April 2025, and TETHER held 66% as of end-June 2025.
The volume of USD stablecoins in circulation on July 21, 2025 is $ 262 billion ( 262 milliards $), excluding DAI (decentralized).
TETHER’s and CIRCLE’s dollar stablecoins account for $226 billion, or 86% of the market.
What about banks ?
Banks derive significant financial advantages from this system, as stablecoin issuers may dedicate part of their asset reserves to repurchase agreements (commonly known as "repos"), which provide them with short-term liquidity. This :
Allows the bank to finance daily operations and meet increased client withdrawals,
Offers an alternative to interbank lending, as repurchase agreements are often cheaper and faster.
"Repos" also help banks manage their capital requirement compliance.
This analysis applies to the European Union as well.
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