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.
CLARITY Act Unable To Save The US From an Upcoming Debt Crisis, Analyst Assesses
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.
Lawrence Lepard, an investment manager and author of “The Big Print,” stresses that even if the CLARITY Act clears the hurdles and reaches 60 votes in the Senate to pass, stablecoin-based demand for U.S. debt still won’t be enough to normalize the current issues.
“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.
Lepard pointed out that the current stablecoin market capitalization, mostly backed by Treasuries purchased by Circle and Tether, has reached $255 billion and has been dropping since January, when it touched $263 billion, indicating a flat growth curve for these stable assets.
“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.
But these new sources of liquidity need to be found if the U.S. strives for its debt instruments to maintain a healthy demand, as the percentage of debt held by foreign actors has shrunk from 57% after the financial crisis to 32% in 2025.
Coinbase Chief Policy Officer Faryar Shirzad recently highlighted the need to, at least, jumpstart this market. “Dollar stablecoins turn growing overseas demand for digital dollars into demand for U.S. Treasuries. We need that at all points on the yield curve,” he concluded.
