Stablecoins, digital tokens pegged to the US dollar, have become increasingly prominent in mainstream finance. Circle and Tether, two leading stablecoin issuers, now hold larger US debt portfolios than several sovereign nations, including Germany and South Korea.
The recent passage of the GENIUS Act has legitimized stablecoin use, attracting interest from banks, payment processors, and Fortune 500 companies. Stablecoins’ stability makes them attractive for cross-border payments and as a settlement layer for the crypto ecosystem.
Tether, the largest stablecoin issuer, holds over $100 billion in US Treasury bills (T-bills), ranking it as the 18th-largest overall holder of US debt. Circle’s USDC, on the other hand, has a market cap of $65 billion and is being used by institutional investors.
The growth of stablecoins poses both opportunities and risks for the financial system. Proponents argue that they could help cement the dollar’s dominance globally and lower long-term interest rates, while skeptics caution against overhyping the numbers.
Industry executives counter that similar fears about money market funds (MMFs) decades ago proved unfounded. However, if stablecoins continue to absorb large amounts of short-term Treasuries, it could disrupt how Wall Street manages liquidity and risk.
The stablecoin industry is now the 18th largest external holder of Treasuries, with projections suggesting it could grow to $2 trillion by 2028. As stablecoin issuers become major T-bill buyers, they are creating a new class of heavyweight buyers in the US debt market born in the volatile crypto arena.
Source: https://www.mitrade.com/au/insights/news/live-news/article-3-1026396-20250809