Stablecoin issuers hold $120b in T-Bills: US Treasury

The United States Treasury reported that stablecoin adoption and crypto volatility could increase demand for Treasury bills as digital asset growth continues.

The US Treasury acknowledged a boom in blockchain usage and cryptocurrency investments in its Fiscal Year 2024 Q4 report. Stablecoins and stablecoins such as Tether (USDT) and Circle’s (USDC) have become major players in this digital economy.

According to the 17-page document, these “stable cash-like” tokens provide less volatile currencies for crypto traders and investors. Treasury experts estimate that crypto-stablecoin pairs account for 80% of all digital asset transactions.

Meanwhile, stablecoin issuers have turned to holding short-term Treasury Bills as the bulk of their token reserves. While 63% of Tether’s $120 billion worth of tokens are in Treasury bonds, crypto operators purchased $120 billion worth of Treasury bonds for their stablecoin reserves.

Like crypto advocates, the Treasury said fiat-pegged cryptos could gain greater adoption as digital assets trend further. Contrary to blockchain enthusiasts, federal government researchers argue that crypto’s inherent volatility and risk will create “flight demand for Treasury securities.”

As digital asset market cap grows, structural demand for Treasuries may increase, both as a hedge against downward price fluctuations and as an on-chain safe-haven asset.

US Treasury

Investors have held over $176 billion in stablecoins across dozens of platforms and blockchain networks. Jurisdictions such as the European Union, which has a Crypto-Asset Markets Regulatory framework, have officially recognized fiat-linked virtual currencies.

In the US, bipartisan negotiations on stablecoin legislation have moved towards bills, and speculators say lawmakers could allow banks to issue assets like USDT.

As bullish sentiment took hold in the stablecoin industry, new players were eyeing individual offerings. Blockchain giant Ripple has released its RLUSD, and even Trump’s World Liberty Finance is reportedly exploring a stablecoin launch.