According to former BitMEX CEO Arthur Hayes, stablecoins issued by major U.S. banks could unlock as much as $6.8 trillion for purchasing U.S. government debt. This scenario is unfolding with the arrival of the new Treasury Secretary, Scott Bessent, whose plan is simple: turn "too big to fail" (TBTF) banks into stablecoin engines to cover growing federal funding needs.


đŸ”č Stablecoins as a New Liquidity Weapon

Hayes argues that banks like JPMorgan are preparing to launch their own blockchain-based digital dollars — such as JPMD — operating on public chains like Base. These stablecoins would absorb client deposits and convert them into demand for U.S. Treasury bills. This setup would not only streamline financial flows but also create a new wave of demand for government debt.


đŸ”č Efficiency, Savings, and Full Control

Stablecoins would allow banks to slash operating costs — especially compliance — while transitioning to AI-driven systems. With all transactions visible on-chain, compliance becomes code, and Hayes estimates this shift could save banks up to $20 billion annually. JPMorgan already has the infrastructure in place.


đŸ”č GENIUS Act: Endgame for FinTechs

The introduction of the GENIUS Act, according to Hayes, clears the path for banks by prohibiting tech firms like Circle or Meta from issuing stablecoins or offering yield-bearing products. FinTech companies are thus locked out of a sector with trillions in deposits now shifting into digital form.


đŸ”č Massive Upside for Bank Stocks?

If banks succeed in transforming deposits into stablecoins and channeling them into Treasuries, their profitability could surge. Hayes predicts a potential 184% increase in the market cap of the eight largest U.S. banks — a $3.91 trillion gain. He recommends long positions in a basket of TBTF banks.


đŸ”č Eliminating Reserve Interest: Another $3.3 Trillion in Play

Another bold step would be ending interest payments on reserves (IORB), which the Fed currently pays banks. This would free another $3.3 trillion that could be funneled into Treasuries. Hayes cites Senator Ted Cruz, who is advocating legislation to abolish IORB, arguing that banks would be forced to replace lost income by buying government bonds.


đŸ”č $10.1 Trillion in Potential Treasury Demand

Together, bank-issued stablecoins and the end of IORB could open up $10.1 trillion in demand for U.S. government debt. Hayes notes this dwarfs the $2.5 trillion liquidity injection by former Treasury Secretary Janet Yellen in 2022, and could allow new debt financing without triggering a bond market crisis.

However, Hayes warns that this strategy has a dark side. In his words, it's “debt monetization dressed in Ethereum chic.” He cautions that anyone waiting for the Fed to resume quantitative easing or slash rates is mistaken. “Some of you are still waiting for monetary Godot,” he wrote. “It’s not happening.” Unless a major war or banking collapse occurs, the Treasury — not the Fed — will be the one managing liquidity.

He concludes with a strong message to investors: 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 filled with libertarian dreams — it’s packed with liquidity buying Treasuries, keeping stocks inflated, deficits funded, and boomers calm.”




#Stablecoins , #ArthurHayes , #bitcoin , #Ethereum , #CryptoNews

Stay one step ahead – follow our profile and stay informed about everything important in the world of cryptocurrencies!

Notice:

,,The information and views presented in this article are intended solely for educational purposes and should not be taken as investment advice in any situation. The content of these pages should not be regarded as financial, investment, or any other form of advice. We caution that investing in cryptocurrencies can be risky and may lead to financial losses.“