A presentation last week to the US Treasury’s Borrowing Advisory Committee (TBAC) explored the impact of stablecoins on the demand for short term Treasuries. One topic was mentioned repeatedly – the potential for stablecoins to offer interest. The last iteration of the Senate’s stablecoin bill, the GENIUS Act, introduced a clause that banned the payment of stablecoin interest before receiving a positive vote by the Senate Banking Committee.
According to the minutes of the TBAC meeting, “There was robust discussion concerning the potential implications of interest bearing stablecoins versus non-interest bearing stablecoins, and the extent to which growth in stablecoins would result in net new demand for Treasury securities rather than a reallocation of demand from banks and money market mutual funds.”
The President’s Executive Order on digital assets made clear the intention to promote the use of US dollar stablecoins beyond US borders. White House AI and crypto czar David Sacks was very clear that the goal is to increase demand for US Treasuries, which helps to lower the cost of servicing the United States’ massive debt.
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