US Treasury Secretary Endorses Crypto: Stablecoins Are the New Weapon for Dollar Hegemony and the New Buyers of US Treasuries
By Xiaobing, TechFlow
On October 27, U.S. Treasury Secretary Scott Bessent appeared at The Shed in Manhattan, New York, for a stage conversation with Ripple CEO Brad Garlinghouse.
The venue was Ripple’s annual Swell Conference, but the topics far exceeded the scope of a single company.
On stage, Bessent placed cryptocurrency within a grand narrative framework: like AI and semiconductors, it is a critical race in the U.S.-China tech competition; USD stablecoins are not speculative tools but technological infrastructure designed to maintain the dollar’s status as the global reserve currency; and stablecoin issuers are emerging as a significant new buyer of U.S. Treasuries.
What Did Bessent Say?
The core arguments can be condensed into three statements:
1. The power base of reserve currencies is shifting from military strength to technology.
Bessent noted during the conversation that historically, the global status of major powers' currencies was underpinned by military force, but this logic is changing, as technological leadership is replacing military might as the cornerstone of reserve currency status. Crypto, AI, and semiconductors together form the technological foundation for America in this competition.
2. Stablecoins serve as a pipeline for the U.S. dollar to penetrate global emerging markets.
Currently, over 90% of stablecoins are denominated in dollars. Bessent argues that for emerging market countries with unstable currencies and high inflation, USD stablecoins provide an alternative channel to acquire dollars outside the traditional banking system, thereby expanding the dollar’s practical usage worldwide.
3. Stablecoins will become a key financing source for the U.S. Department of the Treasury.
Under the GENIUS Act (the recently passed federal regulatory framework for stablecoins), payment stablecoin issuers must hold cash, qualified U.S. Treasuries, or other approved liquid reserve assets in at least a 1:1 ratio.
The logic is straightforward: for every stablecoin minted, there corresponds a demand to purchase U.S. Treasuries. The larger the stablecoin market becomes, the more buyers of Treasuries exist.
Bessent even compared the GENIUS Act to the National Currency Act signed by Lincoln in 1863, viewing both as institutional changes of the same historical magnitude.
He also expressed regret over the failure of the CLARITY Act (broader legislation on crypto market structure) to pass Congress, which was rejected by the Senate on September 15 in a 49-to-50 vote, falling 11 votes short of the 60-vote threshold. However, Bessent stated that the Treasury has "significant authority" to collaborate with the SEC and CFTC to advance the compliance framework for the crypto industry through regulatory action and to prevent crypto businesses from being "debanked" by the traditional banking system.
Stablecoins + Treasuries: A Major Transaction in Motion
Bessent’s assessment of stablecoins as a "Treasury financing source" is hardly unfounded.
A clear chain of data underpins it:
The current total market capitalization of stablecoins is approximately $300 billion, with Tether (USDT) and Circle (USDC) accounting for roughly 90% combined. Together, these two issuers hold approximately $170–220 billion in U.S. Treasuries and related assets.
In full-year 2024, stablecoin issuers purchased approximately $40 billion in short-term Treasury bills, a volume comparable to sovereign buyers like Japan and Singapore.
Under the GENIUS Act, compliant stablecoin reserves must be invested in short-term Treasuries maturing within 93 days. This perfectly aligns with another strategic move by Bessent. In August, he announced doubling the scale of long-term Treasury repo operations, funding them by issuing more short-term Treasury bills—a so-called "Treasury Twist."
The incremental demand created by stablecoins precisely targets the short end of the Treasury curve.
Standard Chartered Bank forecasts the stablecoin market will reach $2 trillion by 2028, corresponding to about $1 trillion in new short-term Treasury demand. Bessent himself noted during Senate hearings that the market is expected to surpass even this projection.
A research paper published by the IMF in March 2026 found that demand shocks from stablecoins have already begun to exert a measurable impact on Treasury yields, with each 1% increase in market cap compressing yields by approximately 0.5 basis points.
From the perspective of the U.S. Treasury, this is a rare "positive-sum game": stablecoin expansion → increased real-world use of the dollar globally → rising short-term Treasury demand → lower government borrowing costs → reinforced status of the dollar as the global reserve currency.
All of this requires no rate cuts by the Federal Reserve, no additional purchases by foreign central banks—only broader global adoption of USD stablecoins.
The Other Side of the Coin
But what Bessent left unsaid on stage is equally important.
The demand for Treasuries from stablecoins is "price insensitive," meaning issuers must hold reserves regardless of yield levels. This is an advantage during calm markets (providing a stable source of demand), but could pose a risk during volatility. If stablecoins face mass redemption waves, issuers would be forced to dump large quantities of short-term Treasuries in a short period, potentially exacerbating market swings. The Bank of England has already issued warnings regarding this scenario.
The failure of the CLARITY Act also leaves a practical question: while stablecoins now have a federal framework (the GENIUS Act), broader aspects of crypto market structure—who regulates exchanges, how tokenized securities are classified, where the compliance boundaries of DeFi protocols lie—still lack legislative answers.
Bessent suggested this gap could be bridged by regulatory actions from the SEC and CFTC, but JPMorgan points out that administrative rules lack the durability of legislation, making them easily overturned by a subsequent administration.
This means the crypto blueprint painted by Bessent operates within a time window; if regulatory actions cannot be codified into law before the end of his administration's term, the stability of these rules will be compromised.
Yet undeniably, the United States is constructing a digital financial order centered on USD stablecoins.
The GENIUS Act provides the legislative framework, the OCC issues bank charters, the Treasury defines its strategic role, and the SEC and CFTC establish regulatory guardrails. Ripple securing a bank charter, Tether and Circle holding hundreds of billions in Treasuries, Robinhood issuing tokenized equities on-chain—these seemingly disparate events are converging into a single river.
Describing the direction of this river, Bessent summarized it in one sentence: "America will win in the digital asset space, and consequently secure a stronger dollar."