Stablecoin Treasuries Question

The rise of stablecoins as major holders of Treasuries is prompting questions about policy, risk, and market stability.

Stablecoin Giants Expand Treasuries Footprint Reshaping the U.S. Economy

Stablecoins have moved from niche crypto trading to the mainstream of U.S. finance after Congress passed the Genius Act in July. The issuers back their dollar pegs with large holdings of U.S. Treasuries, with Tether reporting over 100 billion dollars in Treasuries and Circle’s USDC market cap nearing 65 billion dollars as it completed a public listing. A July report from Apollo estimated the stablecoin industry is the 18th largest external holder of Treasuries. The market has also seen Circle grow its footprint after a major public listing and a surge in USDC’s use across payments and transfers.

The shift creates a dual dynamic. A growing stablecoin presence could help stabilize Treasury supply by attracting a steady domestic buyer, but it also transfers a chunk of the debt market to private, profit seeking firms. If stablecoins become gargantuan holders, policy makers must consider how this changes monetary policy transmission and liquidity management. Regulators will need guardrails without stifling the growth of a payments technology that promises faster cross border transfers.

Highlights

As stablecoins grow, watchers will demand safeguards that protect both markets and everyday users.