Circle and Tether, two major stablecoin issuers, hold over $145 billion in U.S. Treasuries, raising concerns about financial system stability.
Total Treasuries Held by Circle and Tether
Circle and Tether now collectively own over $145 billion in U.S. Treasuries, surpassing the holdings of many countries, including Germany. This significant influence on the U.S. Treasury market arises from the growing demand for stablecoins.
Risks to the Credit System
As stablecoin issuers hold increasing amounts of U.S. Treasuries, concerns arise regarding potential risks to the credit market. A loss of confidence in stablecoins could lead to serious market disruptions. Experts note that this scenario may resemble the Eurodollar situation, highlighting potential systemic vulnerabilities.
Regulatory Attention on Stablecoins
The GENIUS Act restricts the maturity of stablecoin Treasuries to short-term notes, emphasizing the growing regulatory scrutiny. Projected growth of the stablecoin market to $2 trillion by 2028 may influence U.S. debt market dynamics.
The approach towards stablecoins and their impact on markets continues to be at the forefront, especially in light of anticipated further regulatory changes.
