Stablecoin issuers have grown their US Treasury securities and repurchase-agreement holdings to roughly $200 billion over the past five years, replacing more than 40% of the demand China has shed, researchers at the Federal Reserve Bank of San Francisco reported.

Tether and Circle, operators of the USDT and USDC tokens that together hold more than 80% of stablecoin market capitalization as of mid-August, anchor the buying. Their combined Treasury and repo positions expanded more than tenfold since 2020.

How has the Treasury investor base changed?

Foreign investors held more than half of outstanding Treasuries around 2008. That share fell to roughly 30% by early 2026, the San Francisco Fed said. Foreign governments supplied nearly all of that foreign demand at its 1970s peak; by early 2026 they accounted for just above 40%.

China drove much of the shift. Beijing's Treasury holdings peaked in late 2013 and contracted by more than half by mid-2026 as the country diversified its reserves. Other foreign central banks followed similar paths, leaving private buyers and reserve-management vehicles to absorb incremental supply.

Why do stablecoins gravitate toward T-bills?

Stablecoin issuers must hold liquid assets that holders can redeem at par. Tether and Circle back their tokens with cash, bank deposits, repurchase agreements and short-maturity US government securities. Federal rules in the GENIUS Act, adopted in 2025, codify that approach. Proposed implementing rules limit eligible reserves to Treasury bills, notes and bonds with remaining maturities of 93 days or less, plus cash, bank deposits and certain Treasury-backed repos.

This framework anchors stablecoin growth to incremental demand for the most liquid corner of the government bond market, rather than for longer-term debt. Custody and risk-management practices reinforce the same preference for the short end.

Where do stablecoins rank among Treasury buyers?

The scale has reordered the rankings at the short end. Since 2023, stablecoin issuers added more short-term Treasuries than Japan, the largest foreign holder of US debt, the San Francisco Fed researchers wrote. Citing Bank for International Settlements analysis, the paper concluded that stablecoin reserve accumulation has grown large enough to influence short-term government bond yields.

Those purchases, however, do not substitute for the long-dated demand China once provided. The maturity gap leaves longer-dated notes and bonds without an equivalent private buyer as federal debt held by the public climbs from about 35% of gross domestic product in 2006 to roughly 100% today.

Could stablecoin Treasury holdings reach $400 billion by 2030?

The trajectory depends on whether stablecoins move beyond crypto trading into mainstream payments. The San Francisco Fed pointed to growing use of dollar tokens for cross-border remittances and as a store of value in economies with volatile currencies. Adoption relative to economic output runs highest in Africa, the Middle East and Latin America, with much of the activity crossing national borders.

Extrapolating recent growth, stablecoin issuer Treasury holdings could approach $400 billion by 2030, the San Francisco Fed researchers cautioned, adding that the estimate carries substantial uncertainty. Regulation outside the US, competing digital-payment products and bank-developed settlement tools could all constrain adoption.

The proposed 93-day maturity cap under GENIUS Act implementing rules now sits with regulators, a rulemaking outcome that will shape which dollar-payment instruments capture the next phase of cross-border flow.