Stablecoin issuers have replaced 40% of China’s lost US Treasury demand
Summary
Tether and Circle have added about $200 billion in Treasury securities and repurchase agreements over five years, offsetting more than 40% of the decline in China’s Treasury holdings. Stablecoin issuers have become major buyers of short-term US government debt as foreign official demand falls, and their purchases can influence bill yields. However, they mainly buy short-maturity assets and cannot replace China’s demand for longer-dated debt. US rules requiring regulated payment stablecoins to hold liquid reserves may further link token growth to Treasury-bill demand. Continued expansion depends on adoption for payments and stores of value, alongside competition from banks and other payment systems.
