Forbes features Kevin Lehtiniitty as he Highlights Concerns Over Stablecoin Impact on Treasury Markets

May 6, 2025

As U.S. lawmakers race to regulate stablecoins under the STABLE and GENIUS Acts, analysts are forecasting a potential seismic shift in global demand for U.S. Treasury securities. Stablecoin issuers—led by players like Tether and Circle—already hold an estimated $150 billion in Treasurys and may soon rival traditional foreign creditors like Japan and China.

In a recent Forbes cover story, Borderless.xyz CEO Kevin Lehtiniitty weighed in on the structural implications of this trend, particularly as traditional financial institutions explore entering the stablecoin space. While stablecoins are currently backed by safe, short-term government debt, Lehtiniitty cautioned that future bank-issued stablecoins could introduce additional risk.

“Bank-issued stablecoins could become subject to the fractional reserve rules that banks have long used to turn their FDIC-insured deposits into more lucrative growth areas,” Lehtiniitty warned.

His comments reflect growing concern that, unlike today’s fully collateralized models, future stablecoin reserves could expand into more volatile asset classes—potentially including commercial real estate or subprime loans. This evolution could reintroduce systemic risk into an ecosystem originally designed for stability.

With financial giants like Bank of America, Visa, and Mastercard moving into stablecoins, Lehtiniitty’s remarks underscore the need for thoughtful regulation as stablecoins increasingly underpin both crypto markets and traditional finance.

For the full article, visit Forbes.