Arthur Hayes has laid out a detailed case for why the U.S. government, through Treasury Secretary Scott Bessent's policies, is increasingly leaning on stablecoins as a financial tool to help fund growing federal deficits while keeping bond yields contained.

"The real stablecoin play isn't betting on crusty FinTechs like Circle CRCL, it's understanding that the U.S. government just handed Too Big To Fail (TBTF) banks the launch keys to a multi-trillion-dollar liquidity bazooka disguised as ‘innovation,'" Hayes wrote.

Hayes contends that stablecoin adoption by TBTF banks, coupled with new regulatory advantages like Supplemental Leverage Ratio (SLR) exemptions and a potential end to the Federal Reserve's practice of paying interest on reserve balances, could unlock massive demand for Treasury bills.

He estimates that:

• $6.8 trillion of T-bill buying power could be unlocked through stablecoin-fueled bank deposits.
• An additional $3.3 trillion could be released if the Fed stops paying interest on reserves held by banks.

In total, this could flood the Treasury market with over $10 trillion of new demand, without the Fed formally resuming quantitative easing.

"Some of you are still waiting for monetary Godot," Hayes wrote, warning investors not to sit on the sidelines waiting for a traditional QE announcement.

"The stablecoin Trojan horse is already inside the fortress, and when it opens, it's not armed with libertarian dreams, it's loaded with T-bill buying liquidity."

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According to Hayes, the structure of the Genius Act, a bipartisan stablecoin bill, ensures that major banks will dominate the stablecoin market. FinTech companies like Circle may find themselves sidelined as they lack access to the deposit base and government guarantees that banks enjoy.

Hayes highlighted JPMorgan's JPM recently announced stablecoin, JPMD, as a key example.

He suggests that banks will aggressively push customers to convert traditional deposits into stablecoins, offering cost efficiencies and freeing up trillions of dollars to purchase T-bills.

The stablecoin shift, Hayes argues, could boost profitability and stock valuations of large banks while creating a hidden liquidity source that supports both the Treasury market and risk assets like Bitcoin BTC/USD and equities.

In Hayes' view, investors overly focused on waiting for a Federal Reserve pivot may miss the real liquidity story that is already taking shape.

“Stop listening to the simp sitting in the cuck chair, and start listening to the man wielding the monster cock,” he wrote, in his typically provocative style, referring to Treasury policy as the more immediate market driver.

Hayes concludes that this policy pathway, while not officially labeled as quantitative easing, could have similar effects: surging liquidity, rising asset prices, and a potentially dramatic upside for Bitcoin and stocks tied to the largest U.S. banks.

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