Scott Bessent has spent the past year selling a simple idea: pass a stablecoin law, and the tokens that back themselves with cash will turn into a standing buyer of US government debt. The Treasury Secretary lifted his own forecast to roughly $3 trillion, a tenfold jump, and framed the issuers as a fresh source of demand for Treasury bills. The stablecoin market he was counting on is going the other way. Total stablecoin supply has slipped to a six-month low near $300 billion, and the two coins that matter most are smaller now than they were in spring.
That gap between the projection and the print is the story. Bessent's pitch was never only about payments. It was fiscal. More stablecoins meant more reserves parked in short-dated Treasuries, which meant a new bid under the government's borrowing at a time when Washington is issuing a lot of it.
Bessent's forecast asked for trillions
The numbers attached to the bet were large. Standard Chartered told clients in February that a stablecoin market heading toward $2 trillion could force the Treasury to lift its bill issuance to keep up. A Brookings Institution model put first-round Treasury bill demand from stablecoin growth somewhere between $400 billion and $2.3 trillion by 2030. Bessent himself has said issuers could end up buying more than $1 trillion in US debt.
All of that rested on supply climbing. The GENIUS Act that set the rules was sold partly on this promise, that regulated dollar tokens would grow into a reliable holder of the country's IOUs.
Supply went the wrong way
Instead the market has been flat to falling since last October. It peaked around $316 billion in May and has drifted down about $10 billion over ten weeks, a roughly 3% slide that pushed it to its lowest level in half a year. Tether's USDT fell close to $6 billion from its May high near $190 billion. Circle's USDC dropped a matching $6 billion, sliding from about $80 billion in March to the low $70s. Together those two still hold more than four-fifths of all supply, so when they shrink, the whole market shrinks with them. The drop is broad rather than one firm's trouble, and the smaller dollar tokens have bled a little share since spring. This is not a one-month blip. Supply has been easing for several months running, even as the tokens changed hands more often.
The law aimed the money somewhere else
Part of the reason sits inside the same statute Bessent leaned on. The GENIUS Act bans payment stablecoins from paying interest to holders. Cash that wants a yield on Treasuries cannot get it through a stablecoin, so it has been moving into tokenized Treasury funds and money-market tokens that pay out directly. Those products are booming while stablecoin supply stalls. Analysts have called it regulatory arbitrage by legal form: the same short-term government debt, held in a wrapper that is allowed to share the interest. The demand for government paper is real. It is just showing up somewhere the stablecoin issuers do not book it, which leaves Bessent's headline number resting on a category that is losing ground rather than gaining it.
None of this kills the thesis outright. Stablecoin rules do not fully bite until the GENIUS Act takes effect in January 2027, and a bloc of twenty-one banks preparing their own coin for that year could change the supply picture fast. For now the buyer Bessent described is smaller than it was in May, and the money that was supposed to fund it is parked next door.