US money-market fund assets rise by $11.77 billion for the week ended June 24 - iMoneyNet.

US money-market fund assets rise by $11.77 billion for the week ended June 24 - iMoneyNet.

US money market fund assets rose by $11.77 billion for the week ended June 24, according to iMoneyNet. This increase, driven by a surge in stablecoin demand, highlights the growing role of digital tokens in the financial landscape.

At a recent Money Fund Symposium in Boston, industry experts discussed the potential impact of stablecoins on the U.S. Treasury market. Stablecoins, pegged to highly liquid assets like the U.S. dollar, are drawing significant demand for Treasury securities. Yie-Hsin Hung, CEO of State Street Global Advisors, noted that approximately 80% of the stablecoin market is invested in Treasury bills or repos, representing around $200 billion [1].

The stablecoin market's rapid growth is expected to outpace the supply of Treasury securities. As more financial institutions and corporations adopt stablecoins for various applications, issuers must hold larger reserves to maintain the 1:1 peg to the greenback. For instance, if the market capitalization of USDC, a stablecoin issued by Circle, increases by $10 billion, the issuer might purchase $10 billion in Treasuries to maintain the peg [1].

The U.S. Senate's passage of the GENIUS Act, which aims to create a regulatory framework for stablecoins, has bolstered hopes for wider adoption. The stablecoin market is currently worth about $256 billion and is estimated to reach $2 trillion by 2028 if the legislation is signed [1].

As the stablecoin market continues to grow, it is likely to become an incremental demand source for U.S. government debt over the next three to five years, according to Mark Cabana, head of U.S. rates strategy at BofA Securities [1].

References:
[1] https://www.investing.com/news/stock-market-news/us-treasuries-face-stablecoindriven-demand-surge-as-supply-looms-4111224