Stablecoins as a Structural Force in U.S. Monetary Policy and Borrowing Costs: Long-Term Investment Implications for Treasury Securities and Rate-Sensitive Assets

The U.S. stablecoin market has evolved from a speculative niche to a foundational pillar of global finance. By Q3 2025, the sector recorded $41 billion in net inflows-the strongest quarterly growth since 2021-while daily active users surged to 3.6 million, reflecting a 69% increase in adoption between mid-2024 and mid-2025, according to a Bitcoinist report. This shift is not merely a function of retail enthusiasm but a structural reordering of how liquidity is accessed and managed, particularly in emerging economies where stablecoins now serve as digital substitutes for the U.S. dollar, as noted in the same report. For investors, the implications extend far beyond the token itself, reshaping the landscape of U.S. monetary policy and borrowing costs in ways that demand careful scrutiny.

The Structural Impact on Monetary Policy

Federal Reserve Governor Stephen Miran has sounded a clear warning: the rise of stablecoins could force a reevaluation of long-term interest rate assumptions. With global adoption projected to swell to $1 trillion–$3 trillion by 2030, stablecoins are poised to increase demand for U.S. Treasury securities, potentially lowering the neutral interest rate (r*), a critical benchmark for monetary policy, as the Coinotag article notes. This dynamic is driven by two forces: first, the international use of stablecoins in countries with unstable local currencies, which creates a parallel demand for dollar-denominated assets; second, regulatory frameworks like the GENIUS Act, which mandate that U.S.-based stablecoins maintain full reserves in safe, liquid dollar assets-primarily short-term Treasurys, as reported by Cointelegraph.

The result is a self-reinforcing cycle: as stablecoin adoption grows, so does the demand for Treasurys, which in turn could suppress yields and reduce borrowing costs for the U.S. government and private borrowers alike, as the Yahoo Finance piece observes. Miran has emphasized that this could lead to a "lower-for-longer" policy rate environment, challenging traditional assumptions about inflation and economic growth, as detailed in the Yahoo Finance report. For investors, this signals a structural shift in the cost of capital-a factor that will reverberate across asset classes.

The Treasury Yield Conundrum

The Brookings Institution has underscored how stablecoins are reshaping Treasury markets. By acting as a conduit for cross-border transactions, stablecoins are redirecting liquidity toward short-dated U.S. debt, a trend amplified by the GENIUS Act's reserve requirements, as the Brookings article explains. This increased demand is already pushing yields lower, with Miran noting that stablecoin-driven demand could reduce borrowing costs for the U.S. government, as noted in the Yahoo Finance report. For bond investors, this presents a paradox: while Treasurys remain a safe haven, their yields may continue to compress, squeezing returns for traditional fixed-income portfolios.

The implications are not confined to Treasurys. Rate-sensitive assets-from corporate bonds to real estate-will face a dual challenge: lower benchmark rates may reduce financing costs, but they also diminish the margin of safety in yield-based investments. For example, mortgage-backed securities and commercial real estate loans could see valuation gains from cheaper capital, but these gains may be offset by reduced income volatility and tighter spreads, as noted in the Yahoo Finance article.

Investment Implications for Rate-Sensitive Assets

The downward pressure on interest rates will have cascading effects on rate-sensitive assets. Lower r* could spur demand for equities in sectors reliant on cheap borrowing, such as technology and real estate. Conversely, sectors dependent on high-yield debt-like utilities or infrastructure-may face margin compression if Treasury yields remain anchored at historic lows, as the ScienceDirect study notes.

Moreover, the nuanced behavior of stablecoins introduces asymmetries. While Tether (USDT) remains dominant in retail transactions, USD Coin (USDC) exhibits sensitivity to interbank rates like the Secured Overnight Financing Rate (SOFR), suggesting that different stablecoins could amplify or dampen monetary policy transmission depending on their collateral composition, as the ScienceDirect study observes. This heterogeneity complicates macroeconomic forecasting and necessitates granular analysis for investors.

Conclusion

Stablecoins are no longer a peripheral phenomenon; they are a structural force reshaping U.S. monetary policy and borrowing costs. For long-term investors, the key takeaway is clear: the demand for Treasurys and the trajectory of interest rates will be increasingly influenced by the growth of stablecoin ecosystems. This creates both opportunities and risks-lower borrowing costs could fuel economic expansion, but compressed yields may erode returns in traditional fixed-income markets. As the Fed recalibrates its policy framework, investors must adapt their strategies to account for a world where stablecoins are not just a tool of convenience but a cornerstone of global liquidity.