Money & Finance › Currencies, the dollar & crypto › Stablecoins: crypto tokens pegged to a currency
Stablecoins as major buyers of Treasury bills
· Concept
Mainstream viewMost economists and practitioners agree.
Because stablecoin reserves sit mostly in short Treasury bills, growing stablecoin supply means growing demand for T-bills.
See it on the Money & Finance map →How it works
Each dollar sent to an issuer becomes a token on one side and, typically, a T-bill or Treasury repo on the other. Tether alone held about $115 billion of T-bills in June 2026; Circle's reserves, about $75 billion, sit mainly in a Treasury money market fund. Together stablecoins rank among the larger holders of US government debt. Treasury Secretary Scott Bessent has said the market could reach $2 trillion or more. T-bills outstanding exceed $6 trillion, so stablecoins remain a modest but fast-growing slice.
Why it matters
New buyers can trim bill yields and help Treasury fund deficits, but they tie part of federal borrowing to a crypto product that could shrink fast.
Facts, rules and data
A 2025 BIS working paper found $3.5 billion of stablecoin inflows lowered three-month bill yields about 2–2.5 basis points within ten days; issuers' attestations show their holdings.
Debates and risks
How much of this is truly new demand, rather than money moved from bank deposits and money market funds that already held bills.
Connections (4)
▸GENIUS Act reserve rules: 1:1 in cash and short T-bills lock in Stablecoins as major buyers of Treasury billsMainstream view
The connection
Because the law allows almost nothing but cash, deposits, short Treasuries and Treasury-backed repos, every dollar of stablecoin growth must land in those assets. Cash and deposits pay little, so issuers keep most reserves in bills and repo to earn their profit. Growth in tokens therefore becomes growth in bill demand.
When and why
US law since July 2025; visible in Tether's and Circle's reserve reports.
How solid is the link?
Monthly reserve reports show the mix; the link is mechanical, not a forecast.
Debates and risks
Whether issuers shift toward bank deposits, as banks would like, reducing the T-bill share.
▸Stablecoins as major buyers of Treasury bills add steady demand for Treasury bills (T-bills)Mainstream view
The connection
Stablecoin issuers buy bills and roll them every few weeks, adding a large, steady buyer at the shortest end of the Treasury market. More demand pushes bill prices up and yields down slightly. Outflows do the reverse, and research finds outflows move yields more than inflows.
When and why
Visible since about 2021 and growing with stablecoin supply, now about $300 billion.
How solid is the link?
A 2025 BIS working paper measured effects of a few basis points; Treasury's borrowing advisory committee discussed stablecoin demand in 2025.
Debates and risks
How large the effect becomes if supply reaches the $2 trillion some forecast.
▸Stablecoins as major buyers of Treasury bills may help finance The national debt and federal deficitsExperts disagree
The connection
Supporters, including Treasury Secretary Scott Bessent, say stablecoins create new buyers for government debt, lowering borrowing costs on a debt of about $40 trillion. Skeptics reply that much of the money comes from deposits and money funds that already held bills, so net new demand is small, and it favors short bills that must be rolled over often.
When and why
A Washington debate since 2025, as the GENIUS Act passed and Treasury leaned on bill issuance.
How solid is the link?
Uncertain: holdings are measurable, but how much demand is truly new cannot be observed directly.
Debates and risks
Whether relying on stablecoin demand nudges Treasury toward more short-term borrowing, raising rollover risk.
▸Stablecoins as major buyers of Treasury bills now rival some countries among Foreign holders of US Treasuries (TIC data): Japan, UK, ChinaMainstream view
The connection
Stablecoin issuers hold mainly T-bills and repo to back their tokens, and the GENIUS Act of July 2025 requires reserves in such safe assets. Counting bills, repo and money-fund holdings, Tether reported about $140 billion of Treasury exposure in March 2026, which would rank it around 17th in Treasury's country table, near Germany and Saudi Arabia.
When and why
Tether, based in El Salvador, and US-based Circle are the largest; growth sped up after the GENIUS Act passed.
How solid is the link?
Issuers' reserve attestations by accounting firms, compared with Treasury's TIC country table.
Debates and risks
Whether stablecoins grow toward the $2 trillion some officials predict, and whether that drains deposits from banks, is unsettled.