Stablecoin Issuers Now 18th Largest Holder of U.S. Debt

Stablecoin issuers are fast emerging as a significant source of demand for the U.S. Treasury notes as concerns about Washington's debt management grow.

Stablecoin issuers are fast emerging as a significant source of demand for the U.S. Treasury notes as concerns about Washington's debt management grow.

Stablecoin issuers are fast emerging as a significant source of demand for the U.S. Treasury notes as concerns about Washington's debt management grow.

According to data tracked by Tagus Capital, issuers now cumulatively hold more than $120 billion in U.S. Treasury notes. That makes them the world's 18th largest holders of U.S. debt, ahead of major current account surplus nations like Germany and South Korea.

Tether Ltd, the issuer of tether (USDT), the world's leading dollar-pegged cryptocurrency by market value, alone holds around $91 billion in Treasuries and Circle, the issuer of USDC, holds short-dated U.S. debt, including repos, worth $29 billion, according to Tagus Capital.

Coincidentally, of the many crypto bills in the U.S. political corridors, stablecoin legislation has been the closest to moving past the U.S. Congress to become law. Hopes that the U.S. will get a new stablecoin law before the elections this year remain. In April, key congressman Patrick McHenry was bullish that the U.S. would have a stablecoin law by the end of the year.

However, attempts to include a stablecoin regulation in an unrelated must-move reauthorization bill failed. McHenry later told CoinDesk that “we’re so close on this, we just need a legislative calendar, so that we can get things across the finish line in the Senate.”

He also echoed the sentiment of the Majority Whip in the House of Representatives, Republican Tom Emmer who suggested that the lame duck session, might be the opportune time to attach a legislation to a must-pass bill. A lame duck session occurs in the transition period after elections before the president-elect takes over in January 2025.

The U.S. government debt surpassed the $34 trillion mark early this year and has been growing faster, roughly $1 trillion every 100 years. Interest payments on the debt, also known as the debt-servicing cost, are projected to reach $892 billion in 2024. The burgeoning debt has caused the Treasury to step up bond supplies since 2023.

On Tuesday, the Congressional Budget Office said the national debt could reach $50 trillion by 2034, equaling 122 percent of annual economic output.

Early this year, COB warned that Unattended mounting debt concerns could lead to Liz-Truss-style market chaos, characterized by the sharp drop in the U.S. dollar and political uncertainty. Crypto pundits have long echoed a similar sentiment, saying debt concerns and loss of confidence in Treasuries could spur widespread adoption of alternative assets like bitcoin and gold.

EDITED BY

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team. A markets journalist since 2019, he covers crypto, precious metals, equities and currencies. He previously worked at Forkast.News and holds a B.A. in Economics from University of California, San Diego.

Amitoj Singh is a CoinDesk reporter covering markets and breaking news. Prior to joining CoinDesk, he covered institutional crypto and Web3 for Blockworks. He began his career in journalism at the Reno Gazette-Journal, where he covered local government, crime and breaking news. He holds a B.A. in Journalism from the University of Nevada, Reno.

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