U.S. Treasury backs crypto oversight as strategic tool in U.S.-China tech race

Traders Union
All News
Crypto
Treasury backs crypto in tech race

Highlights

Bessent states at Ripple's Swell conference that digital assets are now integral to U.S.-China tech rivalry and strengthen the U.S. dollar's reserve status.
Over 90% of stablecoins are backed by U.S. dollars, with issuers often holding U.S. government securities, expanding global dollar reach and supporting federal financing.
Bessent views Congress's failure to pass the Clarity Act as disappointing, but asserts the Treasury, SEC, and CFTC can collaborate on crypto oversight frameworks impacting market confidence.

Crypto policy and dollar strategy

As reported by CoinDesk, Bessent says at Ripple's Swell conference that digital assets are becoming part of the broader competition between U.S. and Chinese technology ecosystems, alongside artificial intelligence and semiconductors.

Speaking with Ripple CEO Brad Garlinghouse on Tuesday, he says countries and companies are increasingly choosing between rival technology stacks, and that financial infrastructure will also shape the reach of the U.S. dollar. Bessent says digital assets can help the U.S. win that contest and further strengthen the dollar's reserve status.

He also rejects the view that stablecoins simply replace existing dollar holdings. Instead, he says they can reach new users in emerging markets seeking protection from weakening local currencies, with more than 90% of stablecoins backed by U.S. dollars and issuers often holding U.S. government securities as reserves.

Regulatory setback and market implications

Bessent says growing stablecoin adoption could become an additional source of financing for the federal government by increasing demand for those reserve assets.

He describes Congress's failure to pass the Clarity Act as a disappointment, but says the Treasury Department can still work with the Securities and Exchange Commission and the Commodity Futures Trading Commission on agency action to advance oversight. He adds that Treasury's convening power, together with the SEC and CFTC, could help build a regulatory framework that serves as a model for other countries.

Bessent also addresses industry concerns over debanking, where crypto businesses lose access to banking services, sometimes under regulatory pressure. He says the Clarity Act would have helped prevent a repeat, but argues that regulatory guardrails and best practices can still be put in place to reduce that risk.

In our earlier article on rising U.S. Treasury yields and widening deficits, we explained how borrowing costs above 5% are tightening financial conditions, lifting mortgage rates, and increasing federal interest expenses as annual shortfalls near $2 trillion. We also noted that heavy debt issuance, competition for capital (including AI investment), and political gridlock make it harder to credibly reduce deficits—factors that keep the long-term funding outlook under strain.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.