Arthur Hayes, the co-founder of BitMEX, believes the US Treasury may soon turn to stablecoins to navigate its growing debt challenges.
In a July 3 post, Hayes argued that the US government’s increasing dependence on bond sales risks destabilizing financial markets unless new strategies emerge.
According to Hayes, the Treasury is struggling to find enough buyers for its debt without pushing interest rates above 5%.
He claimed that Treasury Secretary Scott Bessent is expected to issue over $5 trillion in bonds to cover new deficits and refinance existing ones. But to avoid sparking panic in debt markets, alternative sources of liquidity are needed, and that’s where stablecoins come in.
Hayes suggests that stablecoins issued by traditional banks could unlock up to $6.8 trillion in Treasury bill purchasing power.
These funds, currently sitting dormant in the banking system, could be recycled into the economy by tokenizing deposits and routing them into US debt instruments.
He explained:
“I believe the reason why the [Bessent] is so pumped up about all things ‘stablecoin’ is that by issuing a stablecoin, TBTF banks will unlock up to $6.8 trillion of T-bill purchasing power. These inert deposits can then be re-leveraged within the fugazi fiat financial system to levitate markets.”
Tokenized dollars
Hayes highlighted JPMorgan’s JPMD token as a case study of how big banks could shift toward blockchain-based compliance and automation.
He argued that traditional compliance processes, reliant on outdated tech and costly human oversight, could be replaced by AI-driven systems using transparent, on-chain data.
In his view, tokenized dollars like JPMD could dramatically cut compliance costs estimated at $20 billion annually across major banks while enabling near-instant regulatory reporting.
Hayes claimed AI tools could enforce regulatory rules more efficiently than human teams because they are built on public blockchains with fully identified addresses.
He said:
“An AI agent trained on the corpus of relevant compliance regulations can perfectly ensure that certain transactions are never approved. The AI can also instantaneously prepare any report requested by a regulator.”
More importantly, Hayes believes this shift offers banks significant advantages of reclaiming deposit dominance from fintech challengers, boosting profit margins by eliminating interest payments on tokenized deposits, and reaping share price gains from improved efficiency.
‘Debt monetization’
Hayes concluded that the US government’s embrace of stablecoins is less about innovation or financial freedom than about monetizing debt.
He said:
“The real stablecoin play isn’t betting on crusty FinTechs like Circle—it’s understanding that the US government just handed TBTF banks the launch keys to a multi-trillion-dollar liquidity bazooka disguised as ‘innovation.’ This isn’t DeFi. This isn’t financial freedom. This is debt monetization dressed in Ethereum drag.”
Considering this, he warned investors watching the macro picture against waiting for traditional signals, such as another round of quantitative easing.
Instead, he advised:
“Go long Bitcoin. Go long JPMorgan. Forget about Circle. The stablecoin Trojan horse is already inside the fortress, 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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