Former BitMEX CEO Arthur Hayes warned that the U.S. Treasury’s growing reliance on debt markets may soon hit structural limits, with stablecoins emerging as a critical new liquidity channel.
In a July 3 Substack post, Hayes said the U.S. Treasury will need new ways to sell trillions of dollars in bonds without causing interest rates to spike. He thinks stablecoins and Bitcoin (BTC) could play a major role in this effort.
According to Hayes, Treasury Secretary Scott Bessent faces the problem of finding buyers for U.S. debt while keeping markets calm. Bessent has a near-impossible task of selling over $5 trillion in bonds this year to cover new deficits and refinance maturing debt, all while keeping the 10-year yield under 5%.
The Federal Reserve, which used to buy bonds to keep rates low, is now trying to control inflation and cannot step in as easily. This leaves the Treasury to find other ways to support the bond market. This has pushed Bessent to look for alternative buyers, namely large U.S. banks and eventually the stablecoin sector.
The solution, according to Hayes, lies in turning bank deposits into stablecoins. He highlights JP Morgan’s JPMD token, which will run on Coinbase’s Base network, as a major turning point. Hayes says that once banks shift customer deposits into tokenized dollars, they can reduce costs by automating compliance and operations, potentially saving $20 billion a year, and then recycle those deposits into Treasury bills.
T-bills, which carry minimal interest rate risk and yield close to the Fed Funds rate, offer a compelling return for banks. Hayes estimates that tokenized deposits could unlock $6.8 trillion in T-bill demand. He also points to a Republican-led proposal to end the Fed’s interest payments on reserves, which would likely force banks to redeploy up to $3.3 trillion in idle funds into Treasuries.
Hayes views these developments as a form of stealth quantitative easing. Rather than the Fed printing money, liquidity will now come from the private banking sector issuing stablecoins and buying T-bills, boosting dollar supply and suppressing yields. For crypto investors, Hayes says this will support risk assets like Bitcoin, which tend to thrive when liquidity rises and real yields fall.
Though he warns of a brief pullback in liquidity if the Treasury refills its cash account too quickly after a debt ceiling hike, Hayes remains bullish. In his view, stablecoins are not just tools for payment. Rather, they are part of a larger macro strategy that ties banking, debt markets, and digital assets together.
