Stablecoins Could Inject $2T into Government Debt—Wall Street Finally Notices Crypto’s Golden Goose

Forget ’risk-free’ treasury yields—stablecoins are about to become Uncle Sam’s favorite liquidity hack. Treasury Secretary Scott Bessent just spotlighted what crypto natives knew for years: every USDC and USDT mint is basically a backdoor T-bill purchase.

The DeFi-to-debt pipeline

With $160B already propping up reserves, Bessent’s $2T projection isn’t crazy—it’s conservative. Circle and Tether now rank among the world’s most aggressive debt buyers, turning algorithmic dollar-pegs into a 24/7 Treasury funding mechanism. Who needs retail bond sales when you’ve got stablecoin issuers vacuuming up supply?

The cynical kicker

Nothing unites crypto anarchists and DC bureaucrats like the magic of leveraged fiat replication. Just don’t ask who’s holding the bag when the peg breaks—again.

Stablecoin growth driving Treasury demand

Much of the projected demand stems from stablecoins, which have come to rely heavily on US Treasury bills to maintain their reserves.

Tether, the largest stablecoin issuer, held nearly $120 billion in short-term Treasury bills as USDT reserves as of the end of March. Meanwhile, Circle, the firm behind the USD Coin (USDC), reported over $22 billion in T-bill holdings as of February 2025.

As stablecoin circulation grows along with rising global demand, so does the need for corresponding collateral in low-risk assets like Treasuries.

The LINK between digital assets and US debt markets is becoming more entrenched, as private issuers increasingly function as steady institutional buyers of government securities.

This emerging source of demand may offer Treasury markets a new layer of resilience and liquidity, particularly amid broader concerns about foreign appetite for US debt.

Congress weighing new legislation

Proposed legislation that aims to formalize the role of stablecoin issuers in the Treasury ecosystem also reinforces the potential demand boost.

The STABLE Act of 2025 and the GENIUS Act of 2025, both under review in Congress, would require issuers to fully back their tokens with high-quality liquid assets, including short-term Treasuries.

However, there are concerns that these bills could be delayed due to the political divide between Democrats and Republicans. Nine lawmakers recently withdrew support for the bill, citing concerns that it lacks rules that would sufficiently protect investors.

If passed, these bills could effectively institutionalize Treasury investment requirements across the stablecoin sector, anchoring digital dollars more deeply within the US financial infrastructure.

Advocates of the bill believe that such rules would bolster trust in stablecoins while cementing the dollar’s primacy in digital markets.