This issue briefly analyzes how the U.S. uses stablecoins to digest U.S. Treasury bonds, for reference.

On May 8, 2025, during his testimony before the House Financial Services Committee, U.S. Treasury Secretary Becerra stated that cryptocurrencies are an important source of innovation driving the global use of the dollar. He noted that digital assets could have a demand of about $2 trillion for U.S. Treasury securities, primarily stemming from stablecoins.
According to analyses by the U.S. Treasury and several agencies, the demand for stablecoins for U.S. Treasury bonds is rapidly increasing. However, whether they can absorb up to $2 trillion in U.S. Treasury bonds and become a lifeline for bond sales is a question that requires a comprehensive assessment of policies, market trends, and potential challenges.
1. Current Demand Scale of Stablecoins for US Treasuries
The current demand scale of stablecoins for US Treasuries has reached hundreds of billions of dollars. As of the end of March 2025, Tether holds nearly 120 billion USD in short-term US Treasuries, while Circle holds over 22 billion USD in Treasuries.
The total market value of stablecoins is approximately $230 billion (2025 data). If calculated based on the current reserve ratio (about 60%-80% in U.S. Treasuries), the demand for U.S. Treasuries would be approximately $138 billion to $184 billion, accounting for 0.38%-0.51% of the total U.S. Treasury market (approximately $36 trillion).
Previously, JPMorgan estimated that by the end of 2024, approximately $114 billion of U.S. Treasury securities would be used as reserves for stablecoins. As the stablecoin market continues to expand and relevant legislation progresses, the future demand for stablecoins in U.S. Treasuries is expected to grow further. U.S. Treasury Secretary Besant stated that in the coming years, the demand for U.S. government bonds in the digital asset sector could surge, with a potential scale reaching $2 trillion, most of which would come from stablecoins.
2. The Strategic Significance of Stablecoins Tied to the US Dollar Most stablecoins are pegged to a fixed exchange rate with the US dollar, such as USDT and USDC. The increase in demand for US Treasuries due to stablecoins implies that stablecoin issuers need to hold more dollar assets as reserves, which makes the use of the US dollar in international payments and settlements more widespread. This increases the demand for US Treasuries in the international market, enhances the market recognition and attractiveness of US Treasuries, further elevating the proportion of dollar assets in global asset allocation and reinforcing the core position of the US dollar in the international financial market.
The demand for stablecoins for U.S. Treasury bonds has prompted a global influx of funds into the U.S. financial markets, providing financial support for the U.S. fiscal deficit and economic development. This enables the U.S. to raise funds at a lower cost, maintain its large military expenditures, social welfare programs, and infrastructure construction, further strengthening the economic and military hegemony of the United States, and indirectly consolidating the hegemony of the U.S. dollar.
The increasing demand for stablecoins for U.S. Treasury bonds has driven continuous innovation and development in the U.S. financial market, enhancing the depth and breadth of its financial market. For example, it has promoted the development of derivative markets related to U.S. Treasury bonds, attracting more international financial institutions to participate in trading in the U.S. financial market, thereby enhancing the influence of the U.S. financial market globally and consolidating the core position of the U.S. dollar in the international financial system.
3. Factors Driving the Growth of Demand for U.S. Treasury Bonds Related to Legislation: The "STABLE Act 2025" and "GENIUS Act 2025" currently under consideration by the U.S. Congress require stablecoins to be fully collateralized by high-quality assets such as short-term U.S. Treasury bonds. If the bills pass, the stablecoin industry will be forced to increase its holdings of U.S. Treasury bonds, potentially bringing an additional demand of $400 billion per year.
Most stablecoins are backed by a 1:1 reserve of cash and high-liquidity assets (primarily short-term U.S. Treasury bonds). Stablecoin issuers earn interest income by holding reserve assets like U.S. Treasury bonds, and this business model encourages issuers to continually expand the issuance of stablecoins, thereby increasing the demand for U.S. Treasury bonds.
As the circulation and global demand for stablecoins continue to rise, issuers need to hold more U.S. Treasury bonds as reserve assets to maintain the value stability of stablecoins. Standard Chartered Bank predicts that by 2028, the total market value of stablecoins may increase from the current $230 billion to $2 trillion. According to current reserve rules, the corresponding demand for U.S. Treasury bonds will reach $1.2 trillion to $1.6 trillion, close to the $2 trillion target.
With the overall development of the digital asset industry, blockchain technology continues to innovate. The integration of stablecoins and other blockchain-based financial products with the U.S. dollar and the U.S. Treasury market is deepening, attracting more investors and funds into the digital asset space, indirectly stimulating the demand for stablecoins in relation to U.S. Treasury bonds. The on-chain tokenized U.S. Treasury bond market is expected to grow from $769 million in 2024 to $3.4 billion in 2025, showing significant growth. If the DeFi ecosystem continues to integrate, it may further expand the liquidity demand for U.S. Treasury bonds.
IV. Stablecoins do not alter the credit logic of U.S. Treasury bonds. In summary, stablecoins have significant growth potential in demand for U.S. Treasury bonds, but the ability to absorb $2 trillion requires meeting the following conditions: first, the relevant legislation must be passed and the reserve requirements strictly enforced to promote industry compliance; second, the adoption rate of stablecoins in cross-border payments and DeFi must continue to rise; third, scale expansion must be achieved during a period of slowing issuance growth or a transformation in demand structure for U.S. Treasury bonds.
**However, from the actual situation, challenges remain.** The outstanding U.S. national debt is approximately $36 trillion, and even if the demand for stablecoins reaches $2 trillion, it would only account for 5.5%, which is insufficient to completely resolve the imbalance in supply and demand for U.S. Treasuries. Traditional U.S. Treasury buyers continue to reduce their holdings, while the growth in stablecoin demand needs to fill this gap. Currently, the absorption rate of stablecoins for U.S. Treasuries (approximately $100 billion added annually) is still lower than the net issuance of U.S. Treasuries (which will be $26.7 trillion in 2024).
The relevant legislation is facing bipartisan differences, with some lawmakers worried about insufficient investor protection, which could lead to delays or adjustments in the legislation, affecting the compliance process for stablecoins. If the proposed relevant legislation is delayed or unable to pass due to political disagreements or other reasons, stablecoin issuers would lack a legal requirement to invest in U.S. Treasury bonds, which could impact the growth expectations for stablecoin demand for U.S. Treasury bonds.
**Additionally,** different countries have varying regulatory policies regarding stablecoins and digital assets, which may lead to restrictions on the operations of stablecoin issuers globally, affecting their business expansion and demand for U.S. Treasury bonds. For example, some countries may adopt a cautious stance towards stablecoins, limiting their use and issuance within their borders, thereby reducing the global stablecoin market size and indirectly decreasing the demand for U.S. Treasury bonds.
The competition in the stablecoin market is becoming increasingly fierce, with new stablecoin projects emerging continuously, leading to potential fragmentation of market share. Some smaller stablecoin issuers may find it difficult to invest heavily in U.S. Treasury bonds due to limited financial resources, unlike larger issuers. At the same time, to stand out in the competition, issuers may adopt innovative asset allocation strategies to reduce their dependence on U.S. Treasury bonds. Additionally, if other more attractive low-risk, high-liquidity assets emerge, stablecoin issuers may transfer some funds from U.S. Treasury bonds to these alternative assets. Some emerging digital assets or traditional financial assets may exhibit better investment value under specific market conditions, thereby diverting the demand for U.S. Treasury bonds from stablecoins.
In summary, stablecoins may become important buyers in the U.S. Treasury market in the short term, but in the long run, their role is more likely to be a temporary relief rather than a complete solution to the supply-demand contradictions of U.S. Treasuries. In fact, the absorption of U.S. Treasuries by stablecoins is predicated on the credit of the Treasuries themselves. If policies and markets work in synergy, the $2 trillion target may be partially achievable, but it will not change the credit logic of U.S. Treasuries themselves. It is unrealistic to pin hopes on stablecoins for the U.S. Treasury market.