Stablecoin issuers have absorbed more than 40% of the decline in China's US Treasury holdings, according to a September 28, 2026 Economic Letter from the Federal Reserve Bank of San Francisco. The study estimates issuers added roughly $200 billion in Treasury securities between 2021 and 2026, with most of that buying concentrated among the issuers of the two largest stablecoins, whose Treasury holdings have grown more than tenfold in five years.

The research identifies a structural shift in the composition of Treasury buyers rather than a marginal one. Since 2023, stablecoin issuers have purchased more short-term Treasury bills than Japan, the largest non-US holder of Treasuries. The concentration in short-dated instruments follows directly from the business model: an issuer must redeem tokens for dollars on demand and therefore holds assets it can convert to cash quickly.

What changed in the buyer base?

The foreign share of Treasury holdings fell from over 50% in 2008 to roughly 30% in early 2026. Much of that decline traces to China, which for years functioned as the archetypal foreign buyer, parking export earnings in long-term US debt as part of a strategic portfolio.

The San Francisco Fed frames stablecoin issuers as a new category of private-sector buyer focused on liquid dollar assets. The contrast is sharp. China held long-dated bonds for strategic reasons; stablecoin issuers hold short-dated bills they can sell on short notice. The two buyer types sit at opposite ends of the curve, and their swap changes the shape of demand even when headline volumes partially offset.

How did regulation lock this in?

The 2025 GENIUS Act cemented the trend by establishing a federal framework that requires authorized domestic stablecoin issuers to back their tokens one-to-one with high-quality liquid assets, such as Treasury bills. In practical terms, the law converted T-bill demand into a structural feature of the stablecoin business. Every new dollar of stablecoins issued under the framework requires a matching dollar of safe, liquid reserves held somewhere.

That regulatory mandate gives the buying pattern a durability that discretionary foreign purchases lack — but it also ties the Treasury market to redemption cycles in crypto markets, a linkage that did not exist a decade ago.

What are the market consequences?

The San Francisco Fed notes that stablecoin demand represents a new source of buying that could affect short-term yields. When a large, steady buyer operates at the front end of the curve, it can influence pricing there. The researchers stress, however, that this demand remains small relative to overall US fiscal financing needs.

The letter also flags a concentration risk. Because most of the buying flows from the issuers of just two tokens, the sector's Treasury footprint depends heavily on a small number of firms. A large wave of redemptions at those issuers could, in theory, trigger sizable sales of short-term bills into the market.

The key operational facts from the study:

• Stablecoin issuers added approximately $200 billion in Treasuries between 2021 and 2026.
• That buying offset more than 40% of China's reduction in Treasury holdings over the same period.
• Since 2023, issuers have bought more short-dated bills than Japan.
• The foreign share of Treasury holdings fell from over 50% in 2008 to roughly 30% in early 2026.

What happens next?

If current growth holds, stablecoin issuer demand could reach approximately $400 billion by the end of 2030. The researchers present this as a projection conditional on today's growth trajectory continuing, not a forecast guaranteed by regulation or market structure.

The metric to watch is whether stablecoin Treasury holdings track toward that $400 billion figure. If they do, the San Francisco Fed's letter may be remembered as an early snapshot of a structural change in who finances the US government — and as the document that first quantified how a crypto-native liability class became a meaningful counterparty to the US fiscal machine.