Recent data shows that stablecoin issuers are gaining significant positions in the U.S. bond market, holding reserves that exceed the holdings of some major economies.
Stablecoin Issuers and Their Bond Reserves
According to the latest figures, the total Treasury reserves held by four major stablecoin issuers—Tether, Circle, First Digital, and Paxos—have reached $182.4 billion. This amount surpasses the holdings of South Korea and the UAE, and is just below Norway. Tether leads with over $125 billion, while Circle manages $55.2 billion.
Reasons for Bond Purchases
These issuers are not merely acquiring Treasuries for status. U.S. government debt provides high liquidity and attractive yields, making it ideal for backing digital dollars. Tether's CEO, Paolo Ardoino, indicated that the firm earned over $1 billion in the first quarter without relying on traditional banks.
Regulation and Its Impact
The significant role of Treasuries in stablecoin reserves is becoming a regulatory requirement. In the U.S., the GENIUS Act proposes to limit stablecoin reserves to cash and short-term Treasury securities. European legislative initiatives further support exclusion of commodity and corporate instruments.
Stablecoin issuers are solidifying their positions in the U.S. bond market, which may affect their influence on financial stability and monetary policy. However, concentrating reserves in Treasury bonds could introduce new risks.
