Treasury Secretary Bessent Sees Stablecoin Industry as Key to Financing US Government Debt

U.S. Treasury Secretary Scott Bessent is positioning the stablecoin industry as a potential solution to the country's mounting debt financing needs, anticipating that digital currency issuers could become major purchasers of government securities, the Financial Times reported on Wednesday.

The Treasury chief has been in discussions with major stablecoin companies including Tether and Circle about their Treasury holdings, viewing the sector as a growing source of demand for short-term government debt. These conversations have influenced the department's strategy to emphasize bill issuance over longer-term securities.

Stablecoins, which maintain their dollar peg by holding reserves of safe assets like Treasury bills, represent a $250 billion market that Bessent expects to expand to $2 trillion. Such growth could provide meaningful support for government borrowing as the U.S. confronts record debt levels and accelerating deficits under Trump's fiscal policies.

The approach gained regulatory backing through July's GENIUS Act, which mandates that stablecoins be backed by ultra-liquid assets including Treasuries. This creates a direct link between the expanding digital currency market and government debt demand.

JP Morgan's global rates strategist Jay Barry said that the Treasury's views of stablecoins as "a real source of new demand" justifies the department's emphasis on short-term debt issuance, according to the FT report.

Bessent's strategy represents the latest effort to integrate cryptocurrency into core U.S. financial infrastructure while addressing practical funding challenges. As digital currency adoption accelerates, stablecoin issuers are becoming significant Treasury market participants, with companies like Tether already holding billions in government securities.

The Treasury Department acknowledged monitoring stablecoin developments following the new regulatory framework, noting the potential to "grow demand for short-term Treasury securities."

The initiative comes as Bessent has increased Treasury's market engagement, with more frequent outreach to financial institutions about debt market conditions and funding concerns.