The Clarity Act is not about Crypto

Delivered May 8, 2026 @ 5:00pm ET

Weather in Bloomington, IN - Sunny, 23⁰ C / 75⁰ F.

It’s graduation week for most universities.

To the students: congratulations on making it through four years of hard work, late nights, pressure, and growth.

And to all the parents who supported them every step of the way — financially, emotionally, and mentally — well done. This milestone belongs to you too.

Table of Contents

• The Clarity Act is not about Crypto. It’s about fi …

• Enter stablecoins.

My name is Gerry Hays, Founder & CEO of Doriot® (pronounced “Doe-ree-oh”), named after French-born American U.S. General Georges Doriot, the father of Venture Capital. I’m also an author (First Time Founders’s Equity Bible), inventor (U.S. patents for ads on t-shirts, coat checking, and VentureStaking - pending), and 21-year professor of venture capital and entrepreneurial finance at Indiana University.

Democratize Venture is my platform to explore the venture markets and share the insights, strategies, and frameworks I bring into the classroom. It’s also a way for me to share principles of prosperity — because at the end of the day, venture is a pathway to prosperity.

The Clarity Act is not about Crypto. It’s about financing America.

Everyone is framing stablecoin legislation as “Washington finally embracing crypto.” But if you zoom out, something much bigger is happening. The U.S. government has a structural financing problem.

• Deficits continue exploding higher.

• Interest expense is becoming one of the largest line items in the federal budget.

• And Treasury issuance keeps accelerating.

The machine only works if someone keeps buying the debt.

Historically, foreign governments played that role. China recycled massive trade surpluses into U.S. Treasuries. Japan absorbed enormous amounts of American debt. Foreign central banks helped fund and stabilize the dollar system for decades. In many ways, U.S. global dominance was built on its ability to export dollars abroad and have the rest of the world recycle those dollars back into U.S. debt markets.

But that dynamic has been changing for years.

China’s Treasury holdings peaked around $1.3 trillion in 2013 and have fallen substantially since then. Foreign ownership as a percentage of total U.S. debt has also declined as Treasury issuance exploded faster than external demand.

At the same time, central banks around the world have been increasing gold purchases and slowly diversifying reserves away from pure dollar exposure.

That doesn’t mean the dollar is collapsing. But it does mean Washington needs new buyers.

Enter stablecoins.

This is where the story gets interesting. Most people still think of Tether and Circle as crypto companies. They’re not.

They are rapidly becoming some of the largest buyers and distributors of short-duration U.S. government debt in the world.

According to the Treasury Borrowing Advisory Committee presentation released in April 2025, stablecoin issuers are already estimated to hold more than $120 billion in U.S. Treasury bills.

And Treasury is openly discussing what happens if stablecoins grow to $2 trillion in market cap over the next several years.

Why?

Because every stablecoin minted requires reserves.

And under proposed legislation like the GENIUS Act, those reserves must largely be held in:

• U.S. Treasury bills

• Reverse repos

• Cash equivalents

• Government money market funds

In other words:

Stablecoin adoption creates structural demand for U.S. debt.

That’s not speculation anymore.
That’s literally how the system is being designed.

The Treasury Borrowing Advisory Committee even states directly that:

And more importantly:

In other words, the U.S. government is now openly modeling stablecoin growth as a future source of Treasury demand. That is an extraordinary development.

Because this changes the role crypto plays in the global financial system. For years, crypto was viewed as a potential threat to dollar dominance. Now it increasingly looks like the opposite.

Stablecoins may become the next evolution of the eurodollar system.

Except instead of offshore banks distributing dollars globally, blockchain networks distribute synthetic digital dollars backed by U.S. Treasuries.

That’s a massive shift.

Every wallet holding USDC or USDT effectively becomes an indirect holder of U.S. government debt.

Every emerging market citizen using stablecoins to escape local currency debasement increases global demand for dollar-backed assets.

Every cross-border stablecoin transaction extends the reach of the U.S. monetary system without requiring the traditional banking rails.

That’s why stablecoin regulation suddenly became bipartisan. Washington doesn’t just want to regulate stablecoins. It wants to integrate them into the financial plumbing of the dollar system.

And honestly, what choice does the US have if it wants to continue to export US Dollars to the world? If sovereign buyers are slowing while deficits continue expanding, the Treasury needs an alternative distribution mechanism.

Stablecoins solve multiple problems simultaneously:

• They expand global dollar access

• They increase demand for short-duration Treasuries

• They reinforce dollar dominance online

• They create programmable settlement infrastructure

• And they do all of this through private-sector balance sheets instead of central banks

That last part matters. Because what we’re witnessing may be the privatization of dollar distribution. Not through banks. Not through governments. But through internet-native financial networks.

The irony is incredible.

Crypto was originally designed to escape the traditional monetary system.

Instead, stablecoins may become one of the most important tools for extending the lifespan of that system.

The CLARITY Act is not just crypto legislation.

It’s the beginning of a new Treasury distribution architecture.

And most people still think this is only about digital assets.

Have a great weekend - Gerry