Stablecoins Overtake Major Economies in US Treasury Holdings

Stablecoins have emerged as significant players in the US Treasury market, with their aggregate holdings now surpassing those of several major economies, including Germany, South Korea, and the United Arab Emirates [1]. Tether and Circle, the issuers of USDT and USDC, hold well over $150 billion in US Treasury bills, collectively outpacing the holdings of individual nations. Tether alone would rank as the 18th-largest global holder of US debt [1]. This shift marks a growing integration of digital assets into traditional financial systems, driven by their unique capacity to offer instant, low-cost, and globally accessible transfers while maintaining a one-to-one peg to the US dollar.

The recent legal clarity provided by the GENIUS Act has further accelerated institutional adoption of stablecoins, allowing them to be used in mainstream payments and settlements [1]. As a result, stablecoins are not only competing with traditional payment processors like Visa in terms of transaction volume but are also gaining traction in corporate treasury operations. Nearly half of surveyed institutions have already integrated stablecoins into their financial workflows [1].

This trend reflects broader investor demand for liquidity and stability, particularly amid macroeconomic uncertainty and geopolitical volatility. As major economies like China and Japan reduce their Treasury holdings, stablecoin issuers are stepping in as potential long-term buyers, offering a new dynamic in the global debt market. Proponents argue that this could enhance market stability and reinforce the dollar’s role in global finance [1]. However, critics caution against overreliance on a still-evolving sector, noting that a loss of public confidence in a major stablecoin issuer could introduce liquidity risks.

The rise of stablecoins as significant Treasury holders underscores the evolving relationship between digital assets and traditional financial infrastructure. As this trend continues, regulators and policymakers may need to adapt existing frameworks to account for the unique characteristics of stablecoins and their growing influence in capital markets. With GDP growth expected to remain subdued in the second half of 2025, the demand for safe, liquid assets is likely to persist, further solidifying stablecoins’ role in the financial landscape [1].

Source: [1] Market Outlook August 2025...................(https://www.bendura.li/en/aktuelles/market-outlook-august-2025/)