Scott Bessent and Howard Lutwick, President Trump’s presumptive new Treasury and Commerce Secretaries respectively, are fervent advocates and large holders of the digital coins Bitcoin (Bessent’s hedge fund held more than $500 million worth through exchange-traded funds) and Tether (Lutwick’s Cantor Fitzgerald brokerage holds 5% or a supposed $600 million worth of Tether Holdings). Lutwick’s Cantor Fitzgerald plans, and Bessent supports, a $2 billion loan flotation in which the brokerage will make loans, backed by Bitcoin as collateral, for the purpose of acquiring Tether coins. That would increase the (still small) amount of Tether coins by 16% and open the way for similar further expansions of its holdings.
The pitch being thrown to Senate committees through the media and their testimonies, had presumably already been made to the President: The Tether coin is supposed to be worth exactly one dollar at all times, and as Tether Holdings sells Tether coins, it purchases “equal amounts” of U.S. Treasury securities. Thus Tether, with Bitcoin—an admitted private security with no fixed value in dollars—as its supposed main liquidity source, will become a bigger and bigger source of demand for new Treasury debt; it will help keep the Treasury market liquid as the national debt rockets upward from its current $36.3 trillion.