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Key Insights:
- Arthur Hayes believes the U.S. Treasury backs stablecoins to access cheaper capital. This support could unlock $6.8 trillion for purchasing Treasury bills.
- Hayes says the Treasury may unlock $10.1 trillion in bond-buying power, indirectly inflating Bitcoin and equity prices.
- He warned of a short-term BTC pullback to $90K–$95K due to TGA-related liquidity stress. However, he expects a rebound after Jackson Hole.
Arthur Hayes reveals the U.S. Treasury backs stablecoins to unlock cheap capital. He sees this as a strategic move to access trillions in financial resources.
The Trump administration is reportedly facing pushback from Jerome Powell on rate cuts. At the same time, the Fed is continuing with quantitative tightening (QT).
Hayes believes stablecoins could help bypass these hurdles and unlock new liquidity. Hayes also unveiled his prediction of crypto market performance until and after fresh capital hits the market.
Arthur Hayes Says US Treasury Is Using Stablecoins As A Monetary Weapon
GENIUS Stablecoin Act is set to accelerate growth in the stablecoin sector. Top U.S. banks are now competing alongside major players like Coinbase and Circle. Arthur Hayes suggests that policymakers, including US Treasury Secretary Scott Bessent, support stablecoins strategically.
He claims they aim to unlock trillions in low-cost capital, not promote financial freedom. Stablecoins are central to this financial shift, drawing attention from traditional institutions and regulatory authorities.
Hayes believes big banks like JPMorgan will likely dominate this space with their newly announced stablecoin (JPMD). He said that US banks have the privilege of government and regulatory backing. They aren’t crypto firms like Circle and Coinbase, which face regulatory hurdles.
Banks can turn regular deposits into stablecoins to lower compliance expenses and improve how payments work. This shift could direct up to $6.8 Trillion toward U.S. Treasury bill investments.
The GENIUS Stablecoin Act helps banks by preventing competition from non-bank stablecoin providers. It also bans paying interest to users, strengthening banks’ control over the system. This ultimately makes stablecoins a banking tool and not DeFi innovation, said Hayes.
US Treasury Using Liquidity Tactics Amid Macro Stress
Hayes added that the US Treasury desperately faces massive borrowing needs. Thus, unconventional tools like stablecoins are used to suppress bond yields.
The US Federal Reserve remains committed to quantitative tightening (QT). However, the Treasury can no longer rely on direct money printing to fund record deficits.
Hayes believes Treasury Secretary Scott Bessent might shift policy without resorting to quantitative easing. One possible move is adjusting the Supplementary Leverage Ratio (SLR) rules.
These changes would let banks hold more U.S. treasuries without needing extra capital. That could free up $5.5 Trillion in balance sheet space for investments. Notice how the SLR ratio exemption helps free up the banks’ balance sheet.
Eliminating interest payments on reserves (IORB) would push banks to redeploy dormant funds into short-term treasuries. This could add another $3.3 Trillion in buying power. Hayes said this could unlock up to $10.1 Trillion in dry powder for U.S. debt absorption.
Hayes believes these actions would push down yields and increase the value of limited-supply assets like Bitcoin and stocks. This could help maintain market stability in the run-up to politically charged elections.
Hayes Prefers Bitcoin Over Stablecoin Issuer Circle
Circle (CRCL), the USDC stablecoin issuer, soared 700% within a month of its June IPO. Its performance has even surpassed that of Bitcoin in 2025.
Despite this, Hayes sees greater potential in TBTF bank stocks and Bitcoin. He views them as more reliable bets for future market gains.
“If we take the average price-to-earnings ratio of the TBTF banks at 14.41x and multiply that by the cost savings and stablecoin NIM potential, it comes out to $3.91 trillion. The current market cap of the eight TBTF banks is approximately $2.1 trillion, which means that stablecoins could pump TBTF bank stocks on average by 184%,” added Hayes.
He warns traders to brace for a short-term liquidity lull due to replenishment of the Treasury General Account (TGA). This could temporarily drain dollars from the system. This may cap Bitcoin’s breakout or lead to a pullback toward $90K–$95K before resuming an uptrend.
Hayes expects a key liquidity catalyst to arrive around the August Jackson Hole conference. If this happens, Powell may hint at the end of quantitative tightening.
Maelstrom’s crypto fund has moved out of altcoins and shifted heavily into staked stablecoins such as USDe. It’s also ready to reduce its Bitcoin holdings depending on market conditions. Despite the short-term skepticism, Hayes is bullish on BTC in the long term.
Hayes predicts that increased stablecoin adoption and supportive fiscal policies will inject massive liquidity into financial markets. He believes this surge could drive Bitcoin’s price up tenfold, reaching $1 Million by 2028.
Disclaimer
This article is for informational purposes only and provides no financial, investment, or other advice. The author or any people mentioned in this article are not responsible for any financial loss that may occur from investing in or trading. Please do your research before making any financial decisions.
