Stablecoin Issuers Hold $182.4 Billion in US Treasuries, Surpassing South Korea and UAE

The four major USD stablecoin issuers have collectively accumulated approximately $182.4 billion in US Treasury bonds, securing the 17th position on the US Department of the Treasury's country-by-country ranking. This substantial holding surpasses the amounts held by South Korea and the United Arab Emirates, placing them just below Norway, which holds $195.9 billion. This development highlights the growing influence of stablecoin issuers in the global financial landscape, particularly in the context of US Treasury holdings.

Tether’s USDT leads the pack with approximately $120 billion in Treasuries, as revealed in its first-quarter attestation. CEO Paolo Ardoino later confirmed that the firm holds “more than $125 billion” and continues to expand its holdings. Circle’s May accountant’s report listed $28.7 billion in T-bills and $26.5 billion in overnight repos, totaling $55.2 billion backing USDC. First Digital’s May 31 dashboard showed $1.665 billion in FDUSD reserves, with 78% held in Treasury bills, amounting to roughly $1.3 billion. Paxos’ PayPal USD (PYUSD) uses overnight reverse-repo agreements collateralized 97% by Treasuries, with $878 million outstanding, implying roughly $880 million in government debt.

The preference for short-dated government debt among these issuers is driven by several factors. These securities settle T-plus-zero at clearing banks, offer daily liquidity, and currently provide yields above 5%. Tether’s latest assurance showed that Treasuries, repos, and Treasury-only money-market funds represented more than 80% of its collateral, contributing to a $1 billion profit in the first quarter. Circle uses BlackRock’s SEC-registered Circle Reserve Fund to hold its bills and repos, enabling same-day liquidation if redemptions spike.

Ardoino noted that issuing stablecoins “creates incremental demand for US debt without relying on the banking system,” highlighting Tether’s ranking above that of Germany, the UAE, and Spain. Circle and Paxos have made similar arguments in policy filings, emphasizing that narrowly distributed, highly liquid collateral protects holders during market stress. This shift in demand for US Treasuries by stablecoin issuers reflects a broader trend in the financial markets, where these digital assets are increasingly seen as a reliable store of value and medium of exchange.

Lawmakers in Washington and Brussels are considering bills that would restrict reserve assets to cash and short-term Treasury securities, maintaining the current composition but limiting diversification into gold or corporate bonds. The GENIUS Act, which cleared the Senate in June, would formalize those limits. At the same time, Europe’s Markets in Crypto-Assets (MiCA) regime already bars commodities for euro-pegged coins. Stablecoin treasurers say the proposed rules align with their investment profile, though they warn that concentration in one asset class links stablecoin liquidity to Federal Reserve funding conditions. This regulatory environment underscores the need for stablecoin issuers to adapt to evolving policies while maintaining their financial stability and liquidity.