In a recent post, BitMEX co-founder Arthur Hayes claimed that “Too Big To Fail” U.S. banks could unlock up to $6.8 trillion in Treasury bill purchasing power by issuing bank-backed stablecoins. According to Hayes, these collateralized tokens could effectively mobilize otherwise idle bank deposits—channeling them into T‑bills and reducing pressure on bond markets amid soaring federal deficits.

Hayes contends the U.S. Treasury, under Scott Bessent, will need to issue over $5 trillion in bonds this year just to fund new deficits and refinance existing debt. Traditional institutional demand may not suffice without pushing interest rates higher. Bank-issued stablecoins—akin to JPMorgan’s JPMD token—could offer a solution by enabling rapid on-chain deployment of funds, sidestepping conventional compliance frictions.

🔑 Main Insights

• Tokenized deposits reap liquidity: Hayes argues that converting bank deposits into stablecoins unlocks vast purchasing capacity while retaining balance sheet utility, a move he calls “debt monetization dressed in Ethereum drag”.

• Automation via AI and on-chain compliance: With public blockchain transparency, Hayes believes AI agents could enforce compliance with regulations more efficiently than legacy systems—potentially cutting $20 billion+ in annual costs and empowering instant reporting.

• Strategic advantage for banks: Stablecoin issuance could help banks regain deposit control, reduce interest expense, enhance margins, and reassert dominance over under-regulated fintech…