The US federal government’s interest payments on national debt surpassed $1 trillion for the first time in fiscal year 2025. Interest expenditure now exceeds both defense spending and Medicare—a first in American history. The GENIUS Act, signed in July 2025, requires stablecoin issuers to maintain 100% reserves in US dollars or short-term Treasury bills. This effectively transforms stablecoin companies into structural buyers of government debt.
Treasury Secretary Scott Bessent declared stablecoins “a revolution in digital finance” that will “lead to a surge in demand for US Treasuries.” Standard Chartered estimates stablecoin issuers will purchase $1.6 trillion in T-bills over four years—enough to absorb all new issuance during Trump’s second term. This would exceed China’s current Treasury holdings of $784 billion, positioning stablecoins as a replacement buyer as foreign central banks reduce US debt exposure. The debt service era has begun, and crypto may be its unlikely beneficiary.
Washington’s embrace of stablecoin regulation is not merely about innovation—it is about survival. The debt service era begins, and stablecoins are quietly becoming critical infrastructure for US debt markets. Near-term, surging Treasury issuance absorbs market liquidity. With risk-free yields near 5%, equities and cryptocurrencies face structural headwinds.
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