Arthur Hayes & Guy Young: The Ultimate Stablecoin Essay

No worries. Obviously feel like we do this every year now. You always seem happier when you're in Korea than other conferences. I don't know why that is, but food's better.

Yeah. So basically obviously this year in crypto has been a lot about stable coins and everyone asked me why is you know US Secretary Bessent and Trump and the first family and all these politicians why are they all getting on the stable coin bandwagon? Is it because they care about innovation? And my answer is no. They don't give a shit about innovation. They're all about projecting power for America and recovering what they believe they've lost. And the big issue is they have a lot of debt and they have to refinance it. And nobody wants to buy a 10-year 30-year bond in America or anywhere else around the world because this has a lot of interest rate risk, a lot of duration risk. But people want to buy short-term debt because they want a good yield because the banks give you basically zero. And so Bessent can issue treasury bills, these less than one maturity bonds, but the problem is who's going to buy them? And so Tether has, you know, come out in terms of, I think, the 19th largest holder of treasury bills globally now, something 150 billion, whatever the number is. And they're insatiable. They want more and more and more because it backs their token USDT. And so how can the US regulators and the politicians support something that expands the use of the dollar digitally, removes sovereignty from different countries and their central banks over control of their people's money and takes control of overseas deposits euro dollars that they can't control in the banking system. And the stable coin is the perfect vehicle for that because by forcing money into stable coins they either sit in a bank deposit or they sit in treasury bills both of which are under the full control of the treasury department. And then the treasury bill example Bessent can issue bills at whatever price he wants because these issuers have to buy them otherwise they don't make any money. Obviously the profit maximizing situations and they want to make money. And so in this essay I basically talked about the numbers and made a very big prediction that there's maybe 10 trillion dollars going into stable coins over the next few years and that's going to power millions or billions more wallets to understand what DeFi is because once you have a stable coin now you want to trade it now you want to lend it now you want to collateralize it and you start existing with all these other Lego blocks like Athena and Pendle and Ethena and some other things in the ecosystem and this could lead a massive just not DeFi summer but sort like a DeFi two or three years until the political winds change in America.