As I understand it stablecoins have to be backed by a dollar 1 to 1 so the natural way to do this is through US treasuries, and earn a yield. Same for other currencies but I'm going with dollars for our purposes here.



Is there a situation where this could create a demand for US treasuries beyond our need to issue new treasuries and associated debt? Say we become the currency of favor for stablecoins for some large percentage of the globe

Could this encourage spending back up the chain to create more treasuries?

Yes. Tether is one of the biggest non-sovereign buyers of US Treasurys, in 2024 there were maybe 10 countries max that bought more than they did. I believe they currently hold more than Germany, Canada, or Taiwan

Precisely. That's why the crypto bills were passed last week. This is a real opportunity to lead the way and have folks across the globe process digital transactions with US treasury backed stablecoins.

Double Oaked said:

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Precisely. That's why the crypto bills were passed last week. This is a real opportunity to lead the way and have folks across the globe process digital transactions with US treasury backed stablecoins.

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But will it encourage / accelerate the US to create debt/securities because of demand, at a time when we need to decrease spending / debt. That would be a bad thing

Its not like congress doesn't like to spend anyway. Now they will have much greater demand for spending/ debt on a global scale

An interesting question. I've been calling this a global
Bail in of US debt.

What's the advantage of a car over a bicycle?

chris1515 said:

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If these coins are secured by USD, what's their advantage over just using USD?

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Faster and cheaper

Yukon Cornelius said:

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An interesting question. I've been calling this a global
Bail in of US debt.

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For now, it makes our debt easier to sell.

What happens when we get past that stage. Does it give congress an incentive, excuse or whatever to pile on more debt.

Probably. Not like they need much incentive as it is.

What would be the top three cryptos associated with increased utilization of stable coins? Right now I assume ETH, XRP, SOL….but want hear views from others.

Chainlink as a service is pretty paramount to making it all work. However I'm not sure how that value translates to their token.

If Chainlink ever abandoned their token and did an IPO I would buy a lot


Aave is another protocol that does billions in defi business etc. and when you hear these CEOs talk about using their eth to participate in DeFi it's 90% of the time going to be using aave.

But same as Chainlink I'm not sure how that translates to value of the aave token.

One narrative that's emerged is buybacks. It's possible some of these larger platforms like Chainlink aave and uniswap start doing buybacks to pump their tokens with money garnered from fees. But that's speculative at best.

Great as long as inflation doesn't wreck the USD.

jamey said:

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chris1515 said:

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If these coins are secured by USD, what's their advantage over just using USD?

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Faster and cheaper

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Can you give an example such as me paying you $500 for some Aggie tickets? I Zelle right now when doing that. What is the future with stable coin?

I could see some cost savings because these are not going to be covered via FDIC insurance.
But the flip side is you'll have some audit/compliance cost to make sure the coins are truly secured by USD. So I think that would be a wash.

I could see some cost savings by avoiding all the KYC and AML compliance costs that normal banks go thru.

But otherwise, where's the cost saving coming from?

I dont have all the answers. I think its used more in some foreign countries right now where their "dollar" isnt so stable.

Tormentos said:

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What would be the top three cryptos associated with increased utilization of stable coins? Right now I assume ETH, XRP, SOL….but want hear views from others.

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As I understand it, currently 50% of global stablecoins use ETH

These are being used to monetize reserves of banks normally held at the FED. In reality, it's gambling what little % of the total money supply is actually even remotely safe. It's essentially liquidating the last bit of juice in the system. Once it's depleted, there's nothing left to use for liquidity should we actually need it. This is very very risky.

I disagree. They are essentially tradable treasury notes.

Wall Street is choosing ETH

It has become the biggest macro trade of 2025 https://t.co/MdqkLU7o7W

— Bitmine BMNR (@BitMNR) July 24, 2025

I can see it.

Yukon Cornelius said:

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I disagree. They are essentially tradable treasury notes.

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Would suggest reading up more.

When Banks collateralize their previously illiquid Reserve Balances, and turn them into fungible dollar stable coins that are useable by their customers, this newfound liquidity will unlock massive growth opportunities for everyone (even these reluctant Banks) https://t.co/T6XccGu05w

— Monetary McFly 🪰 (@Monetaryguy589) July 11, 2025

In the past, Banks created the checkable deposits that everyone uses in the economy. Banks do this by creating new Loans

In the past, the Fed created our physical currency backed by Treasuries posted as collateral from the Banks

Today, non-bank entities can create stablecoins…

— Monetary McFly 🪰 (@Monetaryguy589) July 2, 2025

“ISSUING STABLECOINS IS BANKS’ DREAM, WHY?”

I made this short video to help everyone understand this topic because, while greatly ignored still, it will be a huge deal for banks and governments willing to sell more and more debt to them pic.twitter.com/qIvMb7EWNM

— JustDario 🏊‍♂️ (@DarioCpx) June 10, 2025

So they are saying that's a possibility but that's not what is currently backing up stable coins right now. What they are describing might be a short term thing to. We might be in a transition period of ending the Fed.

Yukon Cornelius said:

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So they are saying that's a possibility but that's not what is currently backing up stable coins right now. What they are describing might be a short term thing to. We might be in a transition period of ending the Fed.

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We can only hope. But ending the FED and giving banks the power to monetize their own reserve balances might be even riskier. The FED is nothing more than the bank's bank. Instead of going to the FED when they need emergency liquidity, they come to.. YOU. That stablecoin? If treasuries are tanking, its worth less than when you bought it. And they would control the spigot for to you use your own money.

People are ONLY considering the upside. They are 100% ignoring the insane amount of risks.

End the FED the right way. Not by giving power to the entities that already control them.

I think you're framing isn't a 100% accurate. Stable coins are essentially money market shares on the blockchain.

I don't think people realize but stable coins act killed the Fed.

Yukon Cornelius said:

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I think you're framing isn't a 100% accurate. Stable coins are essentially money market shares on the blockchain.

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Sounds right, and which can be used as money directly

chris1515 said:

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If these coins are secured by USD, what's their advantage over just using USD?

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People outside the US who don't have access to dollars can buy USD stablecoins to escape the local terrible money.

Yukon Cornelius said:

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I don't think people realize but stable coins act killed the Fed.

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Why wouldn't it be the opposite? The dollar doesn't stick to the stable coins, the stable coins stick to the dollar...

If the dollar goes significantly down in value, the stable coin is tied to the dollar so it goes down just as much. What am I missing?

We haven't printed a dollar since 1971. So if the currency to be used is stable coins backed by us debt instead of federal reserve notes what's the point of the Fed?

Again, the stable coins are tied to the dollar - not the other way around. The dollar isn't assigned to a stable coin like it was tied to gold.

I think you're building a case for gold, bitcoin, or any other non-stable coin. Stable coin basically tell the Fed that it doesn't matter how much a dollar is worth in 10 years, the stable coin is always going to be worth one dollar.



I do think stable coins have a place, like in countries with failing currencies that was mentioned...

Negative. It's the inverse. You might be confusing the term DOLLAR. Which is why I make the distinction a dollar hasn't been made since 1971.

Stable coins should be viewed as a NEW currency. USD, FED NOTES, and Stable coins.

I think stable coins will serve as a mechanism for a global bail IN of Us debt.

Still catching up on this topic but reading H-A's second tweet he posted, stable coins are tied to the back-end treasury (bypassing USD) and can be issued by non-banks.

So, now you have broken the bank's stranglehold on being the middle layer between the Fed and citizens. Thus, a direct collateralization of the Treasury.

In effect, this feature is creating one of the same features USCBDC would have done - bypassing banks. And the potential for the issuer/controller of this stable coin to governor your use of it based on value is/was one of my fears of USCBDC. Once you give someone else control of how and when you spend your money then its all over but the crying.

It also feels like a bail-in of the US as Yukon posted, but maybe what I've posted here can't be all of these things at once.

This is my initial interpretation of stable coin. I could be wrong.

Banks already control what you can and cannot spend money on. I've been debanked for buying bitcoin. With stable coin issuers NOT having to be banks it creates competition in the market. 1. If let's say USDC starts controlling what people spend money on people will switch to USDT or others. 2. The node validators process TXs not an institution like a bank. 3. On a public blockchain you can easily change to not controllable assets in seconds.

This is the exact opposite of a CBDC.

Yukon Cornelius said:

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Banks already control what you can and cannot spend money on. I've been debanked for buying bitcoin. With stable coin issuers NOT having to be banks it creates competition in the market. 1. If let's say USDC starts controlling what people spend money on people will switch to USDT or others. 2. The node validators process TXs not an institution like a bank. 3. On a public blockchain you can easily change to not controllable assets in seconds.

This is the exact opposite of a CBDC.

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Who debanked you for buying bitcoin. In the USA??

Like I said, I could be wrong and don't fully understand this yet so I guess I was thinking with a direct connection to the Treasury and if/when fluctuate then this being digital means you could be immediately governed in usage - like what happens in China using their govt backed digital money. In other words, we are just going to turn your money off for a few weeks while we sort stuff out.

However, you are saying there are off ramps against that by switching nodes. That's great.