Stablecoin issuers hold $120b in T-Bills: US Treasury

The United States Treasury reported that stablecoin adoption and crypto volatility could increase T-Bill demand as digital asset growth continues.

The U.S. Treasury acknowledged a boom in blockchain use and cryptocurrency investment in its Fiscal Year 2024 Q4 report. Stablecoins, fiat-pegged tokens like Tether (USDT) and Circle’s (USDC) have developed into key players in this digital economy,

According to the 17-page document, these “stable cash-like” tokens provide less volatile currencies for crypto traders and investors. Treasury experts estimate that crypto-stablecoin pairs comprise 80% of all digital asset transactions.

Meanwhile, stablecoin issuers have gravitated toward holding short-term Treasury Bills as the bulk of token reserves. 63% of Tether’s $120 billion token rests in T-Bills, while crypto operators have bought $120 billion worth of Treasuries for stablecoin reserves.

Like crypto proponents, the Treasury said fiat-pegged cryptos could see more adoption with further digital asset uptrend. Unlike blockchain enthusiasts, federal government researchers argue that crypto’s inherent volatility and risk will field a “flight-to-quality demand for Treasuries.”

Structural demand for Treasuries may increase as the digital asset market cap grows, both as a hedge against downside price volatility and as an on-chain safe-haven asset.

U.S. Treasury

Investors have housed over $176 billion in stablecoin across dozens of platforms and blockchain networks. Jurisdictions like the European Union, which has a Markets in Crypto-Assets Regulation framework, have formally recognized fiat-tied virtual currencies.

In the U.S., bi-partisan negotiations over stablecoins legislation have progressed toward bills, and speculators say lawmakers may allow banks to issue assets like USDT.

New players were eying individual offerings as bullish sentiment engulfed the stablecoin sector. Blockchain giant Ripple released its RLUSD, and even Trump’s World Liberty Finance was reportedly exploring a stablecoin launch.