While some supporters of Treasury Secretary Scott Bessent believe the Digital Asset Market Clarity Act is a key element to fixing the U.S. government debt market, others dismiss the idea as misguided.
Lawrence Lepard, an investment manager and author of "The Big Print," emphasizes that even if the CLARITY Act overcomes all hurdles and secures the 60 votes needed for passage in the Senate, the demand for U.S. debt from stablecoins would still be insufficient to normalize the current situation.
"Just want to dispel one misconception that seems widespread among some Bessent supporters. The notion that passing CLARITY will lead to stablecoins rescuing the Treasury market is not supported," Lepard stated on social media.
Lepard pointed out that the current market capitalization of stablecoins, primarily backed by Treasury bonds purchased by Circle and Tether, has reached $255 billion and has been declining since January when it hit $263 billion, indicating a stabilization in the growth curve of these stable assets.
"The Treasury needs to roll over more than $8 trillion in debt annually. 3% coverage is not that much. It would require the 'Clarity Act' and significant growth. This reminds me of DOGE," he concluded.
While most analysts agree that clear regulatory status would undoubtedly boost demand for payment stablecoins, Lepard's comments suggest expecting a significant surge in demand capable of offsetting the need for debt instruments seems unrealistic.
However, these new sources of liquidity need to be found if the U.S. aims to maintain healthy demand for its debt instruments, as the share of debt held by foreign investors has declined from 57% post-financial crisis to 32% in 2025.
Coinbase's Chief Strategy Officer, Faryar Shirzad, recently highlighted the need to at least kickstart this market. "Dollar-pegged stablecoins turn growing overseas demand for digital dollars into demand for U.S. Treasury bonds. We need this across all segments of the yield curve," he concluded.
