Stablecoin issuers have accumulated roughly $200 billion in US Treasury securities and repurchase agreements over the past five years, offsetting more than 40% of the decline in China’s US debt holdings over the same period, according to new research from the Federal Reserve Bank of San Francisco.
Shifting Dynamics in the US Debt Market
Foreign ownership of outstanding Treasury securities has dropped from over 50% in 2008 to approximately 30% by early 2026. Official foreign government entities now represent just above 40% of foreign Treasury demand, down from near total dominance in the 1970s.
China, whose Treasury holdings peaked in late 2013, saw its portfolio fall by more than half toward $600 billion by mid-2026. Meanwhile, major stablecoin operators like Tether (USDT) and Circle (USDC)—which command over 80% of stablecoin market cap as of mid-August—have expanded their combined reserve holdings toward $200 billion. Since 2023, stablecoin issuers have acquired more short-term Treasury bills than Japan, the largest sovereign foreign holder of US government debt.
Maturity Mismatch and the GENIUS Act Framework
Despite replacing a significant share of China's volume, stablecoin issuers operate in a distinct maturity segment. China historically trimmed longer-dated notes and bonds, whereas stablecoin reserves are concentrated in short-term Treasury bills and overnight repos to maintain 1:1 token redemptions at par. This asset concentration is reinforced by the GENIUS Act, adopted in 2025, which mandates that approved US payment stablecoins back tokens with eligible reserves having remaining maturities of 93 days or less.
As overall US public debt has ballooned from roughly 35% of GDP in 2006 to 100% today, private buyers are playing an increasingly influential role as US macroeconomic pressures mount. Bank for International Settlements research cited by the San Francisco Fed indicates that stablecoin demand now measurably impacts short-term Treasury yields. If current expansion rates persist, stablecoin holdings of short-term government debt could reach $400 billion by 2030.
Key Takeaways
- Stablecoin issuers added $200 billion in Treasuries and repos over 5 years, filling 40% of China's debt pullout.
- Foreign ownership of US debt fell to 30% by early 2026, with sovereign foreign governments accounting for just 40% of that total.
- Tether and Circle represent over 80% of stablecoin market cap and have accumulated more short-term Treasuries than Japan since 2023.
- The 2025 GENIUS Act caps payment stablecoin reserve asset maturities at 93 days or less.
Why It Matters
This structural shift effectively transforms global digital asset users—particularly across emerging markets in Latin America, Africa, and the Middle East—into indirect underwriters of US government borrowing. As capital flows into dollar-pegged tokens for cross-border settlements, stablecoin issuers aggregate this private international demand to absorb US short-term debt issuance. However, because regulatory frameworks lock these reserves into ultra-short maturities, stablecoin growth provides liquidity strictly for short-term bills without alleviating yield pressure or financing costs for long-term Treasury bonds.
