Russia just accused the United States of using crypto to “wipe” its $35 trillion debt. While it does sound like the usual propaganda, Once you dig a bit into it, there’s is actually some merit there.

A new class of US Treasury buyers.

Most people think of stablecoins (like Tether USDT or Circle’s USDC) as simple crypto payment tools. Fast, cheap, and global money transfers. What they don’t know, is that under the hood every new stablecoin minted corresponds with a US Treasuries to back it. It’s the only way to generate yield per the GENIUS act, which was signed into law this July.

This means stablecoins are a massive and growing buyer of government debt. How big? Tether alone holds roughly $127 billion in US Treasuries, more than South Korea and Saudi Arabia. That makes it the 17th largest T-bill holder globally.

Every new dollar of stablecoin supply is a new marginal buyer of American debt.

The Geopolitical Context

For decades, the main export of the US was Dollars as a reserve currency and international settlement (see PetroDollar) for banks, central banks, and commerce. Countries like China, Japan, Saudi Arabia had to hold and use dollars and their main way to make these dollars work? US Treasuries, earning interest while keeping their own currencies competitive.

But there’s a new Sheriff in town

“a strong dollar… is a tax on American manufacturers” .
- JD Vance, USA VP [BusinessStandard]

The US administration has new economic policy in mind, a part of it includes weakening the US dollar in order to reshore and protect domestic manufacturers. Strategic advisors like Stephen Miran and Scott Bessent have drafted what they call the

1. Foreign governments US Treasury holdings are at all time lows. This trend is also going to continue. Why hold US bonds yielding ~5% if the currency itself is devaluing ~10% a year?)

, a plan to devalue the dollar, boost exports, shrink the trade deficit, and kickstart manufacturing in the US again. [WSJ]

How are they planning to do that?

The Debt Monetization Flywheel

“Stablecoin legislation backed by US Treasuries… will expand US dollar usage all around the world… 2 trillion is a very reasonable number and I could see it greatly exceeding that”

- Scott Bessent, USA Treasury Secretary

If you zoom out:

1. The DXY is down ~10% YTD. The US has already begun massively devaluing the Dollar. This is only going to increase throughout this presidency.

3. Stablecoins are filling the gap. The GENIUS act, with the full encouragement of the US admin, is going to rapidly and massively increase USD stablecoins proliferation and circulation.

This is also some pretty bad news to most countries who have a weaker currencies than the US.

The Stablecoin Milkshake Theory

A US Treasury backed token that settles globally in seconds is already a better dollar. But add yield and you create something nuclear: a self directed migration of deposits from weak currencies into synthetic dollars that earn more than local banks ever can.

If you’re in Argentina, Nigeria, or Turkey, why hold pesos, naira, or lira? Why even hold dollar deposits at a local bank? Stablecoins are safer, more liquid, and higher yielding.

And they move without permission.

More on this soon.

So Is the Russian Correct?

While the US is not "wiping out its 35T debt" the administration has engineered a beautiful way to monetize the debt, exporting the USD not as a store of value or risk free asset, but as a technologically superior, global, instantaneous money.

The bottom line remains: Stablecoins are becoming a critical gear in America’s debt engine.

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