Stablecoin issuers exploit US treasury market to buy Bitcoin for free, warns Max Keiser

The US Treasury market is facing unprecedented pressure as stablecoin issuers like Tether and Circle use their holdings of government debt to fund Bitcoin purchases—effectively acquiring the cryptocurrency “for free,” according to Bitcoin advocate Max Keiser.

With Tether alone holding nearly $120 billion in US Treasury securities, these firms are not just backing their stablecoins but also generating massive interest income, some of which is being funneled into Bitcoin. This practice, while legal, raises serious concerns about financial stability and the long-term health of the US Treasury market.

How stablecoin issuers dominate the US Treasury market

The US Treasury market has become a critical playground for stablecoin issuers. Tether (USDT) and Circle (USDC) collectively hold over $140 billion in short-term Treasury bills, making them some of the largest non-government holders of US debt.

• Tether reported $120 billion in Treasury holdings in Q1 2025.

• Circle disclosed $22 billion in Treasury bills in February 2025.

These holdings generate substantial interest income, which issuers can reinvest, often into Bitcoin. Keiser warns that this creates a dangerous cycle where stablecoin firms profit from government debt while diverting funds into speculative assets.

The hidden risk to the U.S. Treasury market

Keiser argues that this strategy amounts to a “speculative attack on the US dollar.” By issuing stablecoins backed by Treasury bills, these firms effectively:

1. Print digital dollars backed by government debt.

2. Earn interest from Treasury yields.

3. Reinvest profits into Bitcoin—effectively acquiring it at no real cost.

“This is financial repression,” Keiser told BeInCrypto. “They’re pushing rates down while increasing malinvestments. It’s a rinse-and-repeat cycle that could accelerate the dollar’s decline.”

The US Treasury market, already under strain from rising national debt, may face further instability if this trend continues unchecked.

Regulatory concerns and government response

Lawmakers are taking notice. The House Financial Services Committee recently questioned Treasury Secretary Scott Bessent about stablecoin issuers’ growing influence in the US Treasury market.

Key concerns include:

• Artificial inflation of dollar demand through stablecoin issuance.

• Potential risks to financial stability if issuers face liquidity crises.

• Undermining initiatives like the proposed US Strategic Bitcoin Reserve.

“Issuing stablecoins backed by T-bills printed out of thin air isn’t a monetary system—it’s a financial hologram,” Keiser remarked.

How AI and financial engineering fuel bitcoin demand

Beyond the US Treasury market, Keiser highlights another trend: institutional players using AI and novel financial structures to maximize Bitcoin exposure.

• Michael Saylor’s MicroStrategy has pioneered the “Bitcoin Treasury” model, using stock and debt issuance to accumulate BTC.

• Vivek Ramaswamy’s Strive Asset Management plans to go public and adopt a similar strategy.

“Financial engineers are inventing ways to outperform Bitcoin itself,” Keiser said. “The implications for global finance are profound.”

The future of the US Treasury market and Bitcoin

As stablecoin issuers expand their influence in the US Treasury market, experts warn of two possible outcomes:

1. Increased Bitcoin Demand – More institutional capital could flow into BTC, driving prices higher.

2. Dollar Instability – Excessive reliance on Treasury-backed stablecoins might weaken the dollar’s long-term position.

Keiser predicts a grim fate for the dollar: “This is a quick, deadly fix—a USD hospice. The final death throes are near.”

Final thoughts

The intersection of stablecoins, the US Treasury market, and Bitcoin is reshaping global finance. While regulators scramble to address risks, firms like Tether and Circle continue leveraging government debt to fuel crypto acquisitions, raising urgent questions about sustainability and financial security.

Regulators face a daunting challenge: how to maintain financial stability while allowing innovation. The current trajectory suggests we may be witnessing the early stages of a fundamental power shift in global finance. As Keiser starkly warns:

“They’re buying Bitcoin for free while the system crumbles. The question isn’t if this will cause disruption, but when – and whether anyone can effectively intervene before the entire architecture of modern finance requires reinvention.”

The coming years may determine whether this represents a dangerous vulnerability or an inevitable evolution of our financial system.

Stay glued to The Bit Gazette for updates on this and other crypto market developments.