#USNationalDebt

Can stablecoins help reduce debt?

As demand for the largest cryptocurrency increases, stablecoins are taking on a different role, emerging as a potential solution to the debt crisis. In a recent post on X (formerly Twitter), U.S. Treasury Secretary Scott Bessent highlighted their potential to reduce national debt.

He explained that as the stablecoin ecosystem continues to grow, it could create substantial private sector demand for U.S. Treasury bonds, which are used as reserves to back the value of stablecoins.

This increase in demand for Treasury bonds would lower the government's borrowing costs, thus helping to manage and potentially reduce national debt. Additionally, Bessent noted that stablecoins could also serve as a gateway for millions of people around the world to enter the dollar-based digital asset economy:

“It’s a win-win-win for everyone involved: the private sector. The Treasury. Consumers,” he said.

Bessent also referenced recent reports predicting that the stablecoin market could grow to $3.7 trillion by the end of the decade. According to him, this scenario is becoming increasingly likely with the passage of the GENIUS Act.

The act seeks to create a regulatory framework for stablecoins and requires issuers to purchase U.S. Treasury bonds. BeInCrypto reported that the Senate passed the bill earlier this week. It is now moving to the House, and if approved, will proceed to the President's desk.