Stablecoin reserves backed by U.S. Treasuries won't be enough to prop up the government debt market, even if the CLARITY Act becomes law, according to Lawrence Lepard, author of "The Big Print." In a statement, Lepard said that issuance of stablecoins is less than 3% of the roughly $8 trillion the Treasury needs to roll over each year, making the asset class a negligible buyer of new debt.
What the author says
Lepard argued that the demand for Treasuries generated by stablecoin reserves is "insufficient" to support the broader debt market. He was careful to note that even with the CLARITY Act — a legislative proposal that would establish a federal regulatory framework for stablecoin issuers — the structural mismatch remains. The author's point: stablecoins may be growing, but they are still a tiny drop in the bucket relative to the scale of annual Treasury issuance.
The math behind the claim
The numbers Lepard cites are stark. Annual Treasury rollover needs hover around $8 trillion. Current stablecoin Treasury holdings, he says, represent less than 3% of that figure. That's a gap of several trillion dollars. Even if stablecoin issuers dramatically increased their Treasury purchases, the pace would be nowhere near enough to offset the government's borrowing needs.
The U.S. government refinances a massive portion of its outstanding debt each year. Any assumption that stablecoins could become a major source of demand for that paper looks shaky, according to Lepard. His comments add to a growing discussion about whether the digital asset sector can meaningfully participate in the Treasury market, or whether it's just a rounding error in the grand scheme.
Stablecoin issuers have been building Treasury positions as a safe reserve, but the scale is tiny when compared to the overall market. Lepard's numbers highlight the limits of that strategy — not just for the stablecoin issuers themselves, but for the financial system that relies on robust demand for government debt.
The CLARITY Act's limited effect
Lepard's statement suggests that the CLARITY Act, which would grant stablecoin issuers a clear legal status and possibly attract more institutional participation, wouldn't change the fundamental equation. The size of the Treasury market is so large that even a well-regulated stablecoin sector would remain a marginal player. His point is less about the bill's merits and more about the arithmetic of debt financing.
The question now is whether policymakers and market participants will take these numbers into account when crafting rules for stablecoins. The CLARITY Act itself is still making its way through Congress, and its future remains uncertain. But even if it passes, Lepard's math suggests the Treasury market will need to look elsewhere for buyers.
