[U.S.] The CLARITY Act, Stablecoins, and the Strategy to Secure Treasury Demand
Amid the absence of a clear regulatory framework for digital assets, observers noted that the CLARITY Act, which would establish basic rules, has been discussed since the start of the administration yet remains stalled without passage. Behind the renewed attention to this bill lies the U.S. Treasury's expanded long-term bond buyback policy, according to the analysis. As bonds retired through buybacks are replaced with new issuance, short-term Treasury issuance increases, and stablecoins have been identified as the buyer needed to absorb this growing supply of short-term paper.
The basic structure of a stablecoin was explained as one in which depositing $1 yields one coin, with its value kept permanently pegged. To build trust, issuers disclose their holdings and generally invest in safe assets such as U.S. Treasuries. Because a larger stablecoin market generates new buying demand for Treasuries, the interpretation offered was that fostering the stablecoin market has become an industrially important lever for the U.S., which needs buyers for its government debt. However, disputes over regulatory jurisdiction (turf battles among similar bodies such as financial regulators, supervisory authorities, and securities regulators) have kept related legislation stalled for more than a year, and it was noted that the CLARITY Act must pass first before stablecoin-related bills such as the GENIUS Act can advance.
This trend was interpreted as an attempt to resolve the problem of insufficient buyers in the U.S. Treasury market, which has pushed prices down and yields up. The outlook presented was that policy could move in a direction of finding new buyers for Treasuries through stablecoins while effectively pressuring financial institutions to expand their Treasury holdings as well. It was further noted that tariff policy was likewise driven by the same underlying goal of lowering U.S. government debt and interest rates, but with insufficient effect, and that the approach is now expanding toward directly asking others to buy Treasuries.
This discussion extended to the idea of South Korea purchasing more U.S. Treasuries. Given that Korea's ratio of U.S. Treasury holdings relative to the size of its economy is lower than in other countries, and that more than roughly 70 trillion won in corporate taxes was collected from the semiconductor sector alone in the first half of this year (comparable to last year's total corporate tax revenue), the view was raised that investing a portion of that in U.S. Treasuries could serve as a positive signal to the United States. However, concerns were also raised urging caution, citing the Trump administration's past consideration of issuing perpetual bonds with no maturity as an example of the U.S. having unilaterally changed its commitments before (such as ending gold convertibility).