Peter Schiff Warns: Stablecoins May Undermine Bond Market and Push Mortgage Rates Higher

Renowned economist and gold advocate Peter Schiff has challenged the popular belief that stablecoins support demand for U.S. Treasury bonds. On the contrary, he argues that stablecoins may disrupt financial balance, crowd out traditional lending, and increase long-term interest rates, including mortgage rates.

No Added Demand, Just Liquidity Redirection In his latest post on X (formerly Twitter), Schiff claimed that shifting capital from savings and money market accounts into stablecoins does not boost demand for U.S. Treasuries. Instead, it simply redirects existing liquidity that would otherwise flow into money market funds—funds that directly buy government bonds. He further noted that stablecoin issuers are the ones purchasing Treasuries, not the users, meaning the interest income is lost to the end users and captured by the issuing companies instead.

Long-Term Effects: Higher Rates and Lower Credit Availability Schiff issued another warning: stablecoin issuers typically buy short-term Treasuries, which could lead to lower demand for long-term bonds—a key factor in determining mortgage and corporate interest rates. According to Schiff, declining demand for long-term Treasuries may result in higher yields, which in turn could raise borrowing costs for homeowners and businesses. He also pointed out that capital locked into stablecoins can no longer be used for private lending, depriving the real economy of productive investment opportunities. “Money flowing into stablecoins to purchase short-term government bonds cannot be lent to private borrowers,” Schiff cautioned.

Clash with BlackRock: Stability vs. Growth Schiff’s stance sharply contrasts with that of BlackRock, the world’s largest asset manager, which recently described stablecoins as one of the megatrends shaping the future of global returns. While many fintech firms and institutions view stablecoins as a liquid and transparent way to gain exposure to the U.S. dollar, Schiff is among those who see their rise as a potential threat to the stability of traditional financial systems.

Regulation Under Scrutiny The growing role of stablecoins has caught the attention of regulators and lawmakers. The debate intensified after U.S. President Donald Trump signed the GENIUS Act, the nation’s first major crypto legislation. Schiff’s remarks come at a time when stablecoin usage is booming—but so are concerns about their broader economic impact, including inflation, capital access, and systemic risk.

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