As the Trump administration ramps up efforts to fast-track stablecoin regulation, analysts are beginning to predict surging demand for U.S. Treasurys.
The STABLE Act in the House and the GENIUS Act in the Senate both aim to bring stablecoin issuers into the regulatory fold, spelling out exactly how much capital, liquidity and risk management is enough. They also aim to clarify which federal or state agencies get to play referee. But there’s another, less flashy subplot: how will widespread acceptance of stablecoins among traditional institutions globally affect the $28 trillion United States Treasury market?
Here’s the thing: Treasurys are the backbone of stablecoin reserves because not much else comes close in terms of safety and liquidity. If you’re offering a digital dollar, you need to back it with assets that are as close to risk-free as possible. This sounds a lot like hundreds of money market mutual funds, which are issued by giants like BlackRock, Fidelity and Vanguard and hold over $6 trillion in assets, mostly in U.S. Treasury bills. The big difference is that unlike a money market fund, say, from Fidelity, which might pay you an annual yield of 4%, most stablecoin issuers have so far resisted offering any kind of yield or income to their holders. That’s one reason why Tether, the largest of them, has extremely high margins and reported over $1 billion in operating profit in the first quarter of 2025.
Right now, the dozens of stablecoin issuers that exist—though mostly Tether, based in El Salvador, and Circle, headquartered in New York—hold an estimated $150 billion in U.S. government debt, primarily short-term T-bills. That’s a rounding error in the $28 trillion Treasury securities market and a fairly insignificant portion of the $6 trillion in Treasury bills outstanding. Most Treasurys are still held by the U.S. government itself, think Social Security and federal pension funds. U.S. mutual funds, banks and insurance companies are the next biggest holders, while foreign investors account for about 30% (roughly $8.8 trillion), led by Japan and China.
But Britain’s Standard Chartered Bank, an $874 billion (assets) institution that offers custody for cryptocurrencies, projects that the global stablecoin market could jump from $240 billion to $2 trillion in just three years. Both current drafts of the stablecoin bills explicitly identify Treasury securities with maturities of 93 days or less as one of the few acceptable reserves. That could mean an extra $1 trillion in demand for T-bills in the near term, according to an April 30 presentation by the Treasury Borrowing Advisory Committee (TBAC), a group of senior bankers, asset managers and hedge fund representatives that advises Treasury officials each quarter. Citi’s research team goes further, suggesting that by 2030 stablecoin issuers could surpass any single foreign country as holders of U.S. government debt. Despite its controversial history, Tether, with $120 billion invested in U.S. Treasurys already, could become the largest holder if it falls into compliance with new regulations.
This market upheaval could unfold as the U.S. national debt climbs past $36 trillion, swelling by another trillion roughly every 176 days. Meanwhile, creditors like China and Saudi Arabia are quietly trimming their Treasury holdings. China’s dropped to $761 billion earlier this year, its lowest since 2009, while Saudi Arabia’s have fallen to a year-and-a-half low of $126 billion, reflecting a global rebalancing of reserves and rising skepticism about U.S. sovereign debt. Enter crypto users around the world, in places like Buenos Aires and Nairobi, using stablecoins for everything from paying their rent to hedging against local currency volatility and simultaneously stepping up as a new, eager class of lenders to Uncle Sam.
The Trump administration has already made its stance on stablecoins clear. Trump and his administration officials have repeatedly stated that they are pushing Congress to pass a bill quickly and send it to the president’s desk.
“Stablecoins have the potential to ensure American dollar dominance internationally to increase the usage of the U.S. dollar digitally as the world’s reserve currency, and in the process create potentially trillions of dollars of demand for U.S. Treasurys, which could lower long-term interest rates,” said crypto and AI Czar David Sacks during his first press conference in February.
Additionally, the Trump family’s crypto venture, World Liberty Financial, announced plans for its own stablecoin, which is now apparently complicating the fate of pending regulation. On May 1, World Liberty announced that the token would be used by MGX, an Abu Dhabi government-backed firm, to invest $2 billion into Binance, the crypto exchange whose founder is
