So awkward, the Federal Reserve is pushing U.S. Treasury bonds, and top European institutions are desperately trying to avoid it.

Recently, a top European asset management firm with assets in the range of A12 to A13 wanted to use A12 level funds to buy USDT and asked me which institution could conduct large OTC transactions using a compliant account. They plan to use a special liquidity convenience account designated for their institution to trade, in order to avoid direct supervision from the Federal Reserve.

I asked them why they needed to avoid direct oversight from the Federal Reserve if they are a compliant institution. They said that the Federal Reserve monitors general accounts in the SWIFT system very closely, and when the Federal Reserve sees a significant “balance” in their account, they keep coming to persuade them to buy U.S. Treasury bonds.

So they quietly and gradually transfer the “balance” funds to the liquidity account, which appears to be general reserves on the surface, but the total amount in this account is limited; it cannot have too much general reserve. They have already deposited 100 billion euros into it, and having too much reserve would be hard to explain.

Now they want to gradually exchange this 100 billion euros into U, freeing up “capacity” so they can continue transferring funds to the general reserve account. This way, the Federal Reserve won’t see that they have a “balance” anymore, and they won’t be pressured to buy U.S. Treasury bonds. It turns out they are trying to avoid the Federal Reserve, creating a sense of an unreliable insurance salesperson; I truly feel embarrassed for the Federal Reserve. 🥹

However, I’m wondering, after the U.S. Senate passed the GENIUS Act, isn’t the backing of stablecoins also U.S. Treasury bonds and dollars? 🤣 Do they not understand? Or is holding stablecoins not the end goal? Is Bitcoin the end goal? Interesting. What do you think?