Comment by dzonga 14 hours ago
one thing with these stablecoins is they're pushing to buying of 'us-debt'.
congrats if you buy a stablecoin - you've effectively financed the US gvt at 0%.
now the US gvt can inflate away that debt at 0 cost to them, and pass on the cost to you.
that's why a bunch of these stablecoin companies are pushing it as a way to save for people in distressed economies.
what a way to steal from the poor.
that's why the crypto act was called GENIUS act.
> You may not receive any interest on your stablecoin balance, but the issuer certainly does
A bunch of zero marginal cost capital funding purchases of U.S. debt would absolutely push down rates, possibly lower than inflation, because if you’re a stablecoin issuer you’re not constrained by yield.
This is a dumb-money venture. And if there is this much money that is this dumb, Treasuries aren’t the worst place for it to go.
All those trilions and trilions of dollars of stablecoins sure are bringing down the us' cost to borrow.
> those trilions and trilions of dollars of stablecoins sure are bringing down the us' cost to borrow
If you think trillions of dollars in de novo price-insensitive demand doesn’t move a market, even one as deep as the Treasury market, I’ve got a stablecoin to sell you.
Yes, trillions of dollars of new price-insensitive demand would move the treasury market. That's why I named that number! But, there just isn't that much value in stablecoins.
It’s actually more of a win-win situation if you look closely.
Stablecoin issuers earn yield from holding U.S. Treasuries, which sustains their business model. Meanwhile, people in distressed economies get practical access to a digital dollar, often cheaper and faster than navigating restrictive exchange rules or paying steep conversion fees at money-changers. That’s meaningful when local currencies are unstable or losing value.
Of course, not all stablecoin issuers are trustworthy, and some governments under economic distress may ban or limit these instruments. But when the setup works, both sides benefit.
The foreign individual is likely better off in game theory terms, but their country is collectively likely worse off due to a reduction in their central bank's independence and ability to perform seigniorage/print money. Difficult to ban for the foreign nation, and probably results in a greater need for dollars for their government also.
Probably not. You would be right if we were talking about honest, competent central bankers. But most people live in poor countries. Why are those countries poor?
Every country is different, but poor countries are mostly poor because they are governed by kleptocrats, generally including their central bankers, and hyperinflation in particular is a constant menace. When the central bankers aren't directly kleptocratic themselves, they are very often incompetent but loyal, similar to most of Trump's nominees. In this situation, generally speaking, things that put power over individuals' lives back in the hands of those individuals, instead of the kleptocrats' hands, will improve the situation not just of the individuals but of their whole country.
> congrats if you buy a stablecoin - you've effectively financed the US gvt at 0%.
USDC on Coinbase yields interest. The USDC people make a little spread on it, but you aren't financing the US government at 0%, you're financing them at market rates. There is counterparty risk just like with a bank. Unlike a bank, there are liquid markets onchain for other fungibles.
It doesn't cost a stablecoin anything but a bit of electricity to manufacture a "coin". The coin is valued at whatever the peg is, but it doesn't move the m2 needle or any other measure of circulation, until they purchase a treasury (or whatever they claim is backing). How much did it cost mr stablecoin to do all that? And you better believe the US Gov NEEDS this to happen.
Russia's take on the system is correct and we're seeing ASIANs and BRICS run away as fast as possible from $.
Ways out include total protectionism/mercantilism or war.
Gold is parabolic now. 10k by March is completely doable.
US govt is financed at whatever rate the stable-coin issuer finances at, which is likely a mixture of T-bills, fed overnight interest rates (via bank accounts), and other assets.
didn't you just explain the USD game? (fleecing the poor worldwide through inflation...) stablecoins don't change much in this.
> congrats if you buy a stablecoin - you've effectively financed the US gvt at 0%.
As MMT teaches us, a government that issues its own currency does not need to borrow to finance itself, as it can create the money it needs, though it may still issue debt for other reasons.
I mean if the US gov moderately lowers the amount of debt it issues (and starts printing more to cover the difference), inflation will go way up, which seems pretty bad.
Times are changing:
> The GENIUS Act requires permitted payment stablecoin issuers to maintain reserves backing outstanding payment stablecoins on at least a one-to-one basis, and provides that reserves may only consist of certain specified assets, including US dollars, federal reserve notes, funds held at certain insured or regulated depository institutions, certain short-term Treasuries and Treasury-backed reverse repurchase agreements, and money market funds.
> In addition, the GENIUS Act requires stablecoin issuers to provide monthly public reporting as to the composition of their reserve portfolios on their website, and requires larger issuers (with more than $50 billion in consolidated total outstanding issuance) to publish annual audited financial statements. These monthly reports must be examined by a registered public accounting firm, and the CEO and CFO of a permitted payment stablecoin issuer must certify the accuracy of these reports to the primary federal payment stablecoin regulator or state payment stablecoin regulator, as applicable.
https://www.lw.com/en/insights/the-genius-act-of-2025-stable...
With regard to Tether none of this is applicable as they aren't compliant with the GENIUS Act. They are in fact attempting to launch a totally separate stablecoin to try to get some of that market: https://www.reuters.com/sustainability/boards-policy-regulat...
Right, and who is looking at it anyways? Let's not kid ourselves, noone at the SEC will be enforcing "genius" act. Does anyone realistically think otherwise?
If it really is the goal to increase treasuries demand by means of stablecoins, then I would expect them to enforce this. If the stablecoins aren't really buying the assets then they do nothing for demand.
If another goal is to enrich the Trump family, then the SEC could forgo enforcement on the World Liberty Financial stablecoin. But they could still enforce the act for everyone else.
Increasing demand for treasuries, thus keeping interest rates down, also directly benefits Trump because he's bought at least $100 million in bonds since becoming president.
https://www.yahoo.com/news/articles/trump-buys-more-100-mill...
Stable coins can print anytime they want, there's no one at the SEC that will regulate it in this admin. As a matter of fact it's pretty well accepted in some circles, especially on subreddits, that Tether did exactly that, printed usdt, purchased btc at effectively 0 cost basis, inflating bitcoin prices by decreasing supply and then turned around and purchased treasuries. Cantor Fitzgerald ran that for them.
Further, stable coins / crypto are almost certainly being used to slop up as much liquidity as possible and has essentially so far pulled 4 trillion out of circulation. If not for that sleight of hand trick, hyperinflation, at least in the USA, would have already happened. Probably still will as there's only so much can kicking that can occur. I know of 30 year olds that literally live in mom's basement and dump nearly all of their just above minimum wage checks straight into Robinhood to blindly purchase crypto. Will forever beat inflation is the mentality.
Sure looks like there's going to be lots of pain for poor and middle class people in the next 5 years.
That's not how any of this works. You may not receive any interest on your stablecoin balance, but the issuer certainly does. Why would they offer to lend money to the US government at zero when they can get the market rate and pocket it? What's more, these are mostly short-term instruments This means any increase in inflation will be reflected in their yield.