The REAL Reason the US is Racing to Embrace Crypto

The U.S. government was once basically at war with crypto, but now they are rapidly embracing it. So why the sudden change? I'm going to make the case that it's not about innovation. It's not about freedom. It's not about democracy. It is about propping up the U.S. treasury market. I'm Joe Brown. I run Heresy Financial, where we publish investment research and training for active investors. But before I did this, I was a stockbroker for years working with the top one percent. And I remember around 2016 and 2017, it got to the point where basically every single day we would have to tell clients to get rid of crypto, stay away from it. If you get into it, you're an idiot. It's a Ponzi scheme. You're going to lose everything. It's going to zero. Invest at your own risk. We can't help. Now, the reason we told them this was not necessarily because all of us actually believed that, but it's because we literally had to tell them that by law. If you didn't already know this by now, your financial advisor does not work for you. They work for the government first. They work for their company second, and they work for you third. In other words, they're not on your side. But now the tide is quickly changing. We're even seeing longstanding crypto opponents like Jamie Dimon, CEO of JP Morgan, saying that you will be able to buy Bitcoin at Chase. And it's not just JP Morgan. It's other banks like Morgan Stanley as well. Many people think this is just the old trope. Well, if you can't beat them, join them. And there might be some of that government just realizing, hey, we can't kill this. So now let's adopt it so that we can regulate it. But Secretary Scott Besant just said the quiet part out loud and showed the real reason why they're so gung ho about this. Let's take a listen. We believe that the United States should be the premier destination for digital assets. And as members of this committee and the Senate are attempting to do, create good market structure around that so that U.S. best practices are used around the world. There is speculation that there may be up to two trillion dollars of demand over the next few years for U.S. government securities from digital assets. Did you hear that? Speculation that there is going to be massive demand for U.S. treasuries through cryptocurrency into the coming future. Now, this comes at a critical time where demand for U.S. treasuries has been falling off a cliff. U.S. treasury performance has been abysmal lately as interest rates have continued to push higher and higher and higher. Rapid deterioration of big buyers for U.S. treasuries is what is pushing for the deregulation for crypto. And here's why. If you take a look at this chart, you can see some of the top major foreign holders of U.S. treasuries. And at the end of the chart, you see one called Tether. Tether is called a stable coin. Now, there are plenty of different cryptocurrencies out there besides Bitcoin, but there is one class of cryptocurrencies called stable coins. And what these stable coins do is they take your cash and then they buy something, another asset that is usually stable. In this case, they're buying U.S. treasuries. And so with a stable coin like Tether, you have a dollar for dollar peg. It operates actually very similarly to how a money market fund works or actually even a bank account. This allows cryptocurrency investors and traders to swap in and out of various cryptocurrencies and hold their money in U.S. dollars in the meantime, without actually moving that cash back out to a brokerage account or a bank account. So cryptocurrency is called stable coins like USDC or Tether. They're really just dollar instruments that buy treasuries on the back end so that they can maintain their peg and have some interest that they pass along through. Now, if you're feeling a little confused by this market, aren't sure if the markets are about to collapse or soar higher, you think things like tariffs or potential trade deals might be a good thing or they might cause the economy to crumble beneath our feet and join me for a free live zoom call coming up very soon here Thursday, June 12th at 7 p.m. Eastern Time, because I'm going to cover a unique strategy that could allow you to profit from the uncertainty. It's called the black swan trade. And after using the strategy in my account for years now to take home some decent returns, I want to share everything I've learned with you. I'll show you how this strategy allowed me to take home an unusually high return of over 1700% in as little as 11 days during a market crash. I'll show you how I've helped others do the same, and some of them did much better than I did. And I'll show you how you can use it to play both the upside and the downside of any market. Plus, I'm even going to give away a free signed copy signed by the man himself, Nassim Nicholas Taleb. His book, The Black Swan, to somebody during the call. All you have to do is click on the link in the description. Register for the event. Remember, it's Thursday, June 12th at 7 p.m. Eastern Time, coming up very soon here and show up for the call. It's a live call. Attendance is completely free, but spots are limited. So don't wait. Sign up now. And I look forward to seeing you there. Now, you might look at the holdings of big countries and think that they are completely dwarfing something like Tether. And that is true. But this is a snapshot in time. And if we take a look at projections into the future, even just a couple of years from now, by the end of 2028, stable coin market caps are expected to exceed every single major holder of U.S. Treasuries. This is exactly what Scott Besant was referring to when he said that there is estimated to be about two trillion dollars in the next couple of years in demand for U.S. Treasuries through stable coins. And that two trillion dollars is significant because it is about double the size of the largest current U.S. Treasury holder, Japan. Now, you're probably thinking, well, what if these stable coins are not actually invested in what they say they're invested in? Because if I put my cash in a money market fund inside of a brokerage account, there are so many layers and regulations and rules and laws that apply to brokers and to money market funds that the money that's in there is definitely in what they say it's in. In this case, it would be T-bills or treasuries. Same thing with bank accounts. A bank is going to take your cash and they're going to loan it out. And they you can see everything that the bank is invested in. But the lack of regulation around cryptocurrencies has caused some big Ponzi schemes, has caused some collapses, has caused, hey, I thought my money was in something and it wasn't actually there. And that's exactly the reason why Congress is currently considering the Genius Act, which is a stable coin bill that is right now set to pass the Senate so-called Genius Act would require stable coins whose value is pegged to the dollar to hold reserves of liquid safe assets like treasury bills. Basically, this is the regulation that would apply to cryptocurrencies to make sure that Heather or USDC that they're actually invested in treasuries. Now, don't get this twisted. This is not to protect you. This is not to protect your money. The time for that has come and gone. Everybody who is touching cryptocurrencies today, who is trading and investing, they've been through it. They've been through the bubbles. They know what to avoid. They've lost the money in the FTX and the other scams. This is not about you. If it was about protecting people and investors, this regulation would have happened a long time ago. No, this is about bailing out the treasury market. This is to make sure that as more and more people start to access alternate forms of money, that it is still the dollar and the U.S. Treasury that is the underlying foundation underneath that. When a government is facing a sovereign debt crisis, usually it's when their debt hits about 120 percent of the GDP of their economy. It means the only thing that matters is figuring out a way to not default. And it is true that default happens by choice if you just choose not to pay, because you can always print in order to pay back. What's happening right now is that printing causes inflation, which makes the interest rate problem even worse. And so policymakers, whether you're looking at Congress or the Fed or the Treasury, they're in between a rock and a hard place. Their debt is becoming so expensive that the only way to pay for it is through printing new money. But the very act of printing new money makes that debt cost more because it pushes interest rates higher. I've talked in a past video about one of the ways they are going to deal with this is bank deregulation so that banks can purchase more U.S. Treasuries without any risk. That will be one of the puzzle pieces. But this genius act to make sure that stable coins are buying Treasury bills and Treasuries is also another huge piece of this puzzle, because so many people who are attracted to crypto in general think that they're escaping the system, think that they're getting money outside of the dollar system, outside of the control of the U.S. government, outside of the inflationary effects of the dollar being printed. Meanwhile, they're slipping that dollar foundation directly under the cryptocurrency markets as well. This is why I always say only invest in Bitcoin, because it doesn't matter what the U.S. government does to tether to USDC, to Ripple, to Ethereum. Those can all be adopted, regulated, shut down, injected with Treasuries. Whatever doesn't matter. Bitcoin is a different story. It's a different animal, one of a kind. Now, if you're sitting there thinking, oh, man, I have no idea how to play this. And if you want me to help you, don't worry, I've got you covered. That's why I'm hosting the Black Swan trade event. Remember, it's Thursday, June 12th at 7 p.m. Eastern time. And if you haven't done so already, click the link in the description below to sign up. I will see you there. As always, thank you so much for watching. Have a great day.