Bessent’s Strategic Stablecoin Plan: Using Digital Dollar Demand to Reshape US Treasury Funding

As the US stablecoin market rapidly matures and the GENIUS Act advances in Congress, a new debt management strategy is quietly forming, that could fundamentally reshape the US Treasury market. At the center of this evolution is the potential for a Bessent led Treasury strategy that leverages regulatory driven demand from stablecoins to optimize borrowing costs and manage the yield curve.

Source - Treasury Dept

The GENIUS Act: Structuring Demand at the Front End The GENIUS Act requires all permitted payment stablecoin issuers to maintain 1:1 reserves in highly liquid, short-term assets, specifically:

• U.S. coins and currency

• Demand deposits

• Treasury bills, notes, or bonds with ≤93 days remaining maturity

• Overnight repo and reverse repo backed by short-term Treasuries

• Money market funds invested solely in the above

• Central bank reserves

Source - Treasury Dept

This regulation creates a legally bound buyer base for the short end of the Treasury curve. With the stablecoin market expected to grow from $234bil to over $2tril by 2028, this could generate as much as $1.2tril in structural T-bill demand (assuming the same 60.0% ratio stable coin issuers currently hold).

Source - Treasury Dept

When it comes to shaping the broader Treasury market, Bessent’s strategy would likely follow a comparable playbook.

1. Shift Issuance Toward Short-Term T-Bills - Stablecoins, by law, must buy short-term Treasuries. Issuing into that demand allows Treasury to raise capital efficiently without distorting long-end yields.
   

2. Constrain Long-End Supply to Control Term Premiums - By issuing fewer 10 to 30-yr bonds, Treasury can reduce pressure on term premiums, helping to maintain confidence in long-run debt sustainability.
   

3. Suppress Front-End Yields Without Fed QE - Regulatory demand from stablecoins effectively anchors front-end yields. This enables a low-cost funding base without monetary intervention.
   

4. Use Private Demand as a Curve Management Tool - The Treasury gains a form of yield curve control by regulating the composition of buyers, turning stablecoin reserve rules into a market plumbing lever.
   

5. Reduce Interest Expense Volatility - Even though T-bills mature quickly, the predictable, non-cyclical demand from stablecoin issuers stabilizes front-end pricing and refinancing risk.
   

6. Extend WAM Opportunistically - While the core strategy may lean short, Bessent could opportunistically issue long bonds during risk off episodes or when foreign demand resurfaces.
   

WSJ reports suggest JPMorgan, Bank of America, Citi, and Wells Fargo are exploring a joint stablecoin venture. If executed, this would embed regulated stablecoins further into the US financial system and potentially expand the structural bid for short-dated US government debt. Unlike crypto-native issuers, these banks have deeper access to repo markets and MMFs, making them even more efficient vehicles for front-end Treasury absorption.

Bessent’s stablecoin plan would leverage a legally mandated buyer base to anchor short term yields, constrain long-end issuance, and reduce borrowing costs, all without expanding the Fed’s balance sheet. This is not traditional yield curve management. It’s fiscal innovation, regulation-driven, market-conscious, and designed for a structurally higher deficit world. The GENIUS Act sets the rules. Bessent’s play is how to capitalize on them.