Lawrence Lepard, author of “The Big Print,” explained that even with CLARITY passing, demand for U.S. Treasuries used to back most stablecoins in circulation was insufficient to prop up the debt market, as issuance is less than 3% of the total $8 trillion needed to position each year.
Key Takeaways
Critics warn that passing the CLARITY Act won’t allow stablecoins to save the US Treasury debt market.Lawrence Lepard notes the $255B stablecoin market covers barely 3% of the $8T annual US debt.Foreign US debt holdings have dropped to 32%, meaning stablecoins alone cannot provide enough liquidity.While some supporters of Treasury Secretary Scott Bessent believe the Digital Asset Market Clarity Act is a key element to fix the U.S. debt market, others dismiss it as a misunderstanding.
“Just want to correct one misperception that seems to be prevalent among some Bessent supporters. The notion is that the passage of the Clarity Act will lead to stablecoins saving the Treasury market is unproven,” Lepard stated on social media.
“The Treasury needs to roll $8 trillion plus of debt per year. 3% coverage is not much. Going to need Clarity passage and a lot of growth. Reminds me of DOGE,” he concluded.
While most analysts agree that a clear regulatory status will undoubtedly increase demand for payment stablecoins, Lepard’s statements indicate that expecting a hike to offset debt demand significantly seems unrealistic.
