Washington’s Shift Towards Crypto Is Driven by Treasury Needs, Not Silicon Valley
Stablecoins have transitioned from merely serving crypto traders to becoming efficient conduits for Treasury demand, argues Pure Crypto co-founder Zach Lindquist.
By Zach Lindquist
Published on September 9, 2025, 5:16 p.m.
Scott Bessent and Jamieson Lee Greer
Caption: Jamieson Lee Greer, U.S. Trade Representative with U.S. Treasury Secretary Scott Bessent.
Much has been made about U.S. President Donald Trump’s embracing approach towards crypto. One theory posits that the White House’s support for digital assets is a favor to Silicon Valley donors, while another suggests it reflects a belief in the efficiency gains that blockchain can bring to payments.
But these anecdotes miss a critical reality: America has a debt problem. With the U.S. national debt reaching over $37 trillion, the question remains — who will continue to purchase that debt?
Foreign investors have started pulling back from U.S. Treasuries, with China reducing its holdings to the lowest level since 2009. Meanwhile, Japan has also been reducing its Treasury stockpiles. As interest rates loom above 4%, Washington is urgently searching for new demand sources.
Treasury Secretary Scott Bessent is optimistic, believing that stablecoins may provide a steady influx of investment into Treasuries.
Stablecoins as Treasury Buyers
Stablecoins, aligned with the dollar’s value, have emerged as one of the most rapidly growing sources of U.S. debt demand. The math indicates that for every dollar allocated to stablecoins, approximately $0.90 flows into Treasuries. In contrast, funds from U.S. banks show only about 11% going towards Treasury investments.
This highlights how Tether, the largest stablecoin issuer, now ranks as a top-20 U.S. Treasury holder with over $125 billion in U.S. debt. Likewise, Circle, which handles USDC, is not far behind.
Clearing the Runway
The Trump administration’s approach appears strategically designed to encourage a domestic stablecoin industry. Recent regulations, including the GENIUS Act, mandate stablecoins be fully backed by cash or near-term Treasuries, effectively driving funds into U.S. government debt.
Efforts to establish a Strategic Bitcoin Reserve show that digital assets are now seen as a significant part of the financial landscape. Furthermore, recent executive decisions have eased the barriers for cryptocurrency transactions, enabling more investment via stablecoins.
Pitfalls and Risks
Nonetheless, Bessent’s plan comes with risks. The relatively small scale of stablecoins compared to the overall financial system may yield unforeseen effects if demand diminishes.
As these dynamics evolve, the implications for U.S. debt marketing could be significant, evidenced by the pursuit of transparent regulations and the listing of stablecoins as instrument for Treasury demand.
In conclusion, the narrative of Trump’s pivot towards crypto often centers on innovation. However, the reality is more urgent and pragmatic; stablecoins are emerging as crucial in maintaining demand for Treasury investments, reshaping the landscape of U.S. debt.
