Stablecoins & US debt

 Most Stablecoins Already Depend on U.S. Debt

This part surprises people:

Many stablecoin issuers hold U.S. Treasury bills as reserves.

So instead of paying off debt, stablecoins often increase demand for Treasuries — they help finance the debt rather than erase it.

👉 Some economists think stablecoins could increase U.S. financial power globally and make it easier to sustain high debt —  though not eliminate it.

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Alright — this is where it gets interesting, 

The new Trump Govt is a fan of crypto.

I wonder if this is related to the US deficit ???

The real debate is whether crypto vs stable coins can be used to  pay off U.S. debt?

👉 maybe the better question is could stablecoins actually make it easier for the U.S. to carry large debt long-term?

Many analysts think the answer is possibly yes — for a few key reasons.

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🌎 1) Stablecoins Can Expand Global Demand for Dollars

Most major stablecoins are dollar-based. When people in other countries use them:

+They’re effectively using digital U.S. dollars

+Thus demand for dollar assets increases worldwide

Why that matters:

+When global demand for dollars rises, demand for U.S. Treasuries often rises too.

+More buyers of Treasuries = lower borrowing costs for the U.S.

Think of stablecoins as exporting the dollar into places traditional banking never reached.

🏦 2) Stablecoin Reserves Often Buy U.S. Debt

Large stablecoin issuers typically back their tokens with:

+Treasury bills

+Cash

+Short-term government securities

So when stablecoins grow:

+Issuers may buy more Treasuries to back them

+That indirectly helps finance U.S. deficits.

In simple terms:

👉 More stablecoin usage → more Treasury demand → potentially cheaper borrowing for the government.

U.S. dollar-based stablecoin issuers hold much of their reserves in short-term U.S. Treasuries. The two largest USD stablecoins by market capitalization, Tether's USDT and Circle's USDC, report holding 62% and 29% of their total reserves in T-bills, respectively.

⚡ 3) Faster Digital Dollar Networks Strengthen Dollar Dominance

One big threat to U.S. debt sustainability would be losing the dollar’s global reserve status.

Stablecoins might actually reinforce it by making dollars:

+Easier to move across borders

+Faster than traditional banking rails

+Accessible without U.S. bank accounts

If businesses worldwide settle in dollar-stablecoins instead of other currencies, the U.S. keeps a powerful advantage:

💡 It can borrow in its own currency at scale.

📉 4) Lower Interest Pressure (The Real Prize)

The biggest risk with $37T debt isn’t the total — it’s the interest payments.

If stablecoins increase demand for Treasuries:

+Interest rates on government debt could stay lower than they otherwise would.

+That makes the debt more manageable even if it keeps growing.

Economists sometimes call this maintaining “financial gravity” around the dollar.

Risks:

This isn’t automatically good for the U.S.

There is a Regulatory risk

If stablecoins grow too large without oversight:

+Bank deposits could shrink

+Financial stability issues could emerge

There is also the risk of Loss of control

Private companies issuing dollar-like money can complicate monetary policy.

And there is the risk of Competition

If non-USD stablecoins (e.g., yuan-based) gain traction, they could weaken dollar demand instead.