According to Arthur Hayes, the former BitMEX CEO, banks in the United States are sitting on the key to $6.8 trillion in T-bill demand, and it all comes down to one thing: stablecoins.
In a long, explicit essay, Arthur said the new US Treasury Secretary, Scott Bessent—who he mockingly refers to as “The Big Scott C*ck” or The BBC—plans to plug Treasury funding gaps by turning too-big-to-fail banks into stablecoin machines.
These banks will launch their own blockchain-powered dollars, soak up user deposits, and cycle that money into Treasuries.
Scott’s mission, like Janet Yellen’s before him, is to borrow trillions each year without causing a spike in yields. “Their bosses like to spend money without raising taxes,” Arthur wrote.
“It then falls to the Treasury Secretary to fund the government via borrowing at an affordable rate.” But the old tricks don’t work anymore. Quantitative easing is off the table. The Fed won’t cut rates. So Scott needs new buyers for a mountain of debt, and stablecoin-fed banks are now his Plan A.
Stablecoins let banks turn deposits into Treasuries
Arthur claims the eight largest US banks have about $6.8 trillion sitting in deposits. Right now, those deposits mostly do nothing. But with stablecoins, those funds can be transformed into zero-duration Treasury buyers.
“By issuing a stablecoin,” he wrote, “TBTF banks will unlock up to $6.8 trillion of T-bill purchasing power.”
Banks like JPMorgan will launch coins like JPMD, run them on public blockchains like Base, and pull customers into the system with perks like cashback and 24/7 access.
These blockchain-based deposits are not actually about convenience for these guys, they’re about control. Regular deposits move slow, require clunky systems, and are tied to outdated tech. Stablecoins let banks cut costs, fire compliance staff, and run everything through AI.
“Jamie Dimon came in his pants when he learned about how stablecoins actually work,” Arthur humorously jabbed. With every transaction visible on-chain, compliance becomes code, and Arthur estimates this switch could save banks $20 billion a year.
JPMorgan already has the infrastructure. Once customers move their deposits into stablecoins, JPMorgan can buy Treasuries with the new assets. The Fed recently lowered capital requirements for Treasury holdings, freeing up an estimated $5.5 trillion in balance sheet capacity.
Don’t expect Circle or any other non-bank to compete, Arthur said. The Genius Act, which received bipartisan support, bars tech firms like Meta from launching their own stablecoins and bans stablecoin issuers from offering yield to customers.
This means FinTechs can’t compete on interest. They can’t tap into the $6.8 trillion worth of deposits sitting inside TBTF banks. And they don’t get the same government guarantees on liabilities. Arthur pointed out, “Even successful issuers like Circle will never be able to tap into the $6.8 trillion worth of TBTF regular deposits up for grabs.”
Arthur also said that if banks successfully convert deposits to stablecoins, the added net interest margin could send bank stocks flying. He calculated a potential market cap boost of $3.91 trillion, or a 184% increase, across the eight largest banks. “If there is a non-consensus trade out there an investor can execute in SIZE,” he added, “it is going long an equally weighted basket of the TBTF banks based on this stablecoin thesis.”
Killing interest on reserves frees another $3.3 trillion
Arthur believes Scott can go further. The Fed currently pays banks interest on reserves (IORB), which keeps $3.3 trillion of capital locked away doing nothing. If Congress ends that policy, Arthur says banks will shift that cash into Treasuries too.
“Why should the Fed print money and prevent the banks from supporting the empire?” he asked. He quoted Senator Ted Cruz, who has been pushing legislation to kill the IORB payments: “That would force banks to replace that lost interest income by converting reserves into treasuries.”
Taken together, stablecoins and killing IORB unlock $10.1 trillion in T-bill demand. That dwarfs Yellen’s $2.5 trillion cash injection in 2022, which helped suppress the 10-year yield below 5%. Arthur called this Yellen’s Activist Treasury Issuance, or ATI. Now, Scott’s version will use a “liquidity bazooka” to buy time and fund debt without triggering a market crisis. The Fed’s Reverse Repo Program is nearly empty. The money has to come from somewhere. So, Scott is turning to banks.
Arthur doesn’t see this as good news for crypto freedom. He calls it “debt monetization dressed in Ethereum drag.” And he warns that anyone waiting for the Fed to announce new QE or rate cuts is delusional. “Some of you are still waiting for monetary Godot,” he wrote. “It ain’t happening.” If a major war or bank collapse doesn’t come first, Powell will stay quiet, and the Treasury will handle liquidity.
The essay ends with Arthur telling investors to stop betting on Circle and start buying Bitcoin and TBTF banks. “The stablecoin Trojan horse is already inside the fortress,” he wrote. “And when it opens, it’s not armed with libertarian dreams, it’s loaded with T-bill buying liquidity aimed at keeping equities inflated, deficits funded, and Boomers sedated.”
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