$37T Question: Can Stablecoins Be a Magic Bullet for US Debt?

Key Takeaways:

• A Kremlin advisor claims the US will “reset” its $37T debt by moving it into stablecoins, an idea experts say is neither legal nor technically feasible.
• Analysts say stablecoins may expand US financial reach, but they cannot erase current obligations without triggering default.
• The warning shows Russia’s deeper concern: America’s growing influence in crypto finance and the opening of a new front in the US-Russia “coin wars.”

U.S. President Donald Trump’s campaign promise to pay America’s $37 trillion debt in Bitcoin was mocked by both supporters and critics as political theater. But in Russia, a powerful rival, the rhetoric has elicited serious warnings.

Anton Kobyakov, a senior advisor to Russian President Vladimir Putin, recently accused the U.S. of positioning itself as arbiter over crypto and gold markets to address declining trust in the dollar. He says Washington will use this influence to devalue its debt by moving it into stablecoins.

“Just think about their debt – $35 trillion,” Kobyakov told participants at the Eastern Economic Forum in Vladivostok earlier this month. The U.S. will reset its debt at the world’s expense by “driving everyone into the cryptocurrency cloud.”

America’s debt has since ballooned to $37 trillion. Trump previously announced plans for a Strategic Bitcoin Reserve, intending to use profits from the reserve to pay off federal debt.

However, Putin’s advisor said the reset would be through stablecoins – a type of cryptocurrency that is tied to a fiat currency like the dollar for stability.

“Over time, when part of the US government debt is placed in stablecoins, the US will devalue this debt. In other words, they have a $35 trillion debt, they drive it into the cryptocurrency cloud, devalue it and start from scratch,” Kobyakov said.

The Kremlin strategist did not provide details on how migrating the debt to stablecoins would lead to devaluation.

Stablecoins Can’t ‘Magically’ Wipe Away US Debt

Cutting through conspiracy and hyperbole, crypto analysts say moving U.S. debt into stablecoins may not be technically feasible.

“Migrating even a fraction of $37 trillion of U.S. debt onto stablecoin rails isn’t just a switch you flip,” Kony Kwong, CEO of GAIB, a company that’s building the economic layer for artificial intelligence on-chain, told Cryptonews.

He said the idea of using stablecoins to “magically devalue” U.S. debt is unrealistic.

“Treasuries are legal contracts, and you can’t just re-label obligations without triggering default or explicit policy moves.”

While new issuance can be slowly and incrementally tokenized, says Kony, using stablecoins to shortchange global creditors would go beyond the limits of what is legally possible.

Symbiotic chief operating officer Jill Friedman, who is also a lawyer, said the proliferation of stablecoins such as Tether’s USDT and Circle’s USDC is likely to increase global access to U.S. dollars.

But simply manipulating stablecoins to erase America’s debt is outside federal remit, she says. Kobyakov’s claim may be Russia’s compensatory grasp for Trump’s weaker points in a soft war that has largely favored the latter.

To start with, the U.S government does not own stablecoins.

“It’s important to remember that U.S. dollar stablecoins are not issued by the government or central bank but by private entities and financial institutions,” Friedman tells Cryptonews. “The biggest USD stablecoin is Tether, which isn’t based in the U.S. and has a market cap of $172 billion.”

America does have an option to create its own sovereign stablecoin. As Kony explains:

“If the U.S. launched a sovereign, Treasury-backed dollar token, it would likely become the default inside regulated pipes (i.e., banks, fintechs, and compliant exchanges). This is because counterparty and policy risk drop, squeezing private issuers on yield capture and onshore market share.”

A federal stablecoin would not phase out USDT and USDC. “They would continue to serve permissionless, cross-border liquidity and faster multi-chain distribution, where a federal coin moves more slowly,” he added.

“We would see more on-chain demand for T-bills (good for U.S. funding), tighter margins for private stablecoins in the U.S., and a split market: regulated dollars for regulated rails, private dollars for the edges.”

Coin Wars

The Kremlin’s novel claim may not be technically precise, but it reveals discomfort with America’s growing influence in crypto and the stablecoin market under the self-proclaimed “Crypto President” Donald Trump.

Russia worries about what could happen if the U.S. acquires an influential stake in a major token, such as USDT or USDC, to pump or devalue it in its own interests, according to analysts.

Kobyakov’s claim also brings Russia and America’s covert “coin wars” into the open. While the U.S. is a clear tech hegemon, Russia is not a pushover.

Russia’s socialist roots may have helped it spawn open-source apostles such as Ethereum founder Vitalik Buterin and TON founder Pavel Durov. Its position as a comparable global superpower has also provided a haven for cypherpunks – like Edward Snowden – hounded by the U.S.

But a centrist culture, even a jail-and-recruit scheme, that places disruptive tech talent under the wings of government has naturally led to a brain drain. Russia is now pursuing a digital alternative to dollar dominance via the BRICS+ platform.

Trump’s Wager On Bitcoin

Paying down federal debt in crypto is a classic wager of the Trump Team. Rather than arbitrarily migrate the national debt to stablecoins, President Trump has floated the idea of stacking up Bitcoin in the government reserve.

The plan has been variously “debunked” by crypto analysts. Ben Ritz, vice president of policy development for the think tank Progressive Policy Institute, says the entire market cap of BTC is nowhere near the U.S.’s $37 trillion debt.

“If all the Bitcoin in the world isn’t worth enough to cover a single year’s budget deficit, there is no way buying 5% of it can plausibly stem the growth of, let alone pay off, our national debt,” Ritz said in a Forbes op-ed.

It is still possible that a reserve currency held for 20 years could increase in value. But aggressive buying would cause price distortion, volatility, and potentially bring down the BTC price, he said. Perceived government takeover, even if limited to 5%, would also “rewrite” the rules of alternative finance.

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