An article on WSJ.com says US Treasury Secretary Scott Bessent may get support from the crypto markets as he tries to push bond yields lower.
Earlier this week, Bessent said the US Treasury Department would use its balance sheet to buy Treasuries in an attempt to drive yields lower. With midterms looming and interest rates stubbornly high, the move temporarily pushed yields lower, but the change was quickly reversed. Because mortgage rates are tied to the 10-year, a lower rate could help the housing market, which has been slowed by high interest rates. The article on crypto assistance points to the GENIUS Act, stablecoin legislation that requires issuers to hold dollars or risk-free dollar-based assets like T-bills. As stablecoin payment use grows, demand for Treasuries is expected to rise, driving yields lower.
Because digital assets can reduce global friction in accessing and holding assets like dollars, this could benefit the US and make the fortress dollar even stronger. In high-inflation economies, it will become fairly simple to hold dollars to mitigate local-currency value declines.
Senator Bill Hagerty, one of the architects of the GENIUS Act, said on X today that this is one reason he sponsored the bill. Hagerty stated:
“I wrote the GENIUS Act in part to cement dollar dominance in the digital arena and drive structural demand for U.S. Treasuries. The downstream effect on borrowing costs and affordability could be the bill’s most important consequence for the American people.”
Now, Congress needs to get its act together and approve the CLARITY Act, which will further benefit the US economy and help to boost digital asset innovation in the US – as opposed to pushing this sector offshore.