Tether and Circle add $200 billion to US Treasury holdings over five years

Stablecoin issuers have quietly become one of the more consequential buyers of US government debt, with Tether and Circle together adding roughly $200 billion in Treasury and repo holdings over five years. Federal Reserve Bank of San Francisco researchers say that sum offsets more than 40% of the decline in China’s Treasury holdings over the same period, a shift that is reshaping who finances Washington’s deficits.

• Tether and Circle increased Treasury securities and repo holdings by about $200 billion over the past five years
• China’s Treasury holdings fell by more than half since their late-2013 peak, toward roughly $600 billion by mid-2026
• Extending current growth rates could push stablecoin issuer Treasury holdings toward $400 billion by 2030, the Fed says

• $200B stablecoin issuer Treasury and repo holdings added over five years
• 40%+ share of China’s Treasury decline offset by stablecoin issuer buying
• ~30% foreign investor share of outstanding Treasuries in early 2026, down from over 50% in 2008
• $400B projected stablecoin Treasury holdings by 2030 if current growth persists

Stablecoin issuers are emerging as a meaningful new buyer of US government debt just as foreign official demand continues to fade. According to research cited by CryptoSlate, economists at the Federal Reserve Bank of San Francisco found that Tether and Circle have expanded their combined Treasury securities and repurchase-agreement holdings by approximately $200 billion since roughly 2020 or 2021. That growth, detailed in a San Francisco Fed economic letter, now offsets more than 40% of the drop in China’s Treasury holdings over the same span.

The timing matters. US federal debt held by the public has climbed from about 35% of gross domestic product in 2006 to roughly 100% today, intensifying scrutiny of who is willing to buy the growing pile of new issuance.

Stablecoin issuer Treasury holdings have grown more than tenfold in five years

The broader picture is one of foreign governments retreating from the Treasury market just as crypto-linked dollar demand expands to partially fill the gap. Foreign investors held more than half of outstanding Treasury securities around 2008, but that share had fallen to roughly 30% by early 2026, the San Francisco Fed researchers found. Within that shrinking foreign bloc, official government buyers accounted for just above 40% of foreign Treasury demand by early 2026, down from nearly all of it at their peak in the 1970s.

China sits at the center of that long-run shift. Its Treasury holdings peaked in late 2013 and had fallen by more than half by mid-2026 as Beijing diversified its reserve assets away from US government debt. As China’s holdings slid toward roughly $600 billion, stablecoin issuers’ Treasury position climbed toward nearly $200 billion, according to the Fed data.

Private investors stepping into that space behave differently than central banks. They can demand higher yields when fiscal risk rises, while stablecoin issuers are structurally required to hold large pools of liquid dollar assets to back tokens redeemable at par.

Tether and Circle control more than 80% of stablecoin market value

USDT and USDC together accounted for more than 80% of total stablecoin market capitalization as of mid-August 2026, the San Francisco Fed researchers noted. Both issuers back their tokens with a mix of short-term Treasury securities, cash, bank deposits and repurchase agreements, holdings sized to meet redemption demand on short notice.

That footprint has already made stablecoin issuers heavyweight participants at the short end of the Treasury curve. Since 2023, the two companies have added more short-term Treasury holdings than Japan, currently the largest foreign holder of US government debt, the research found. The San Francisco Fed, citing work from the Bank for International Settlements, said that buying is large enough to measurably move short-term government bond yields.

The comparison with China has a limit, however. Beijing’s reductions have concentrated in longer-dated US debt, while stablecoin issuers overwhelmingly buy Treasury bills and other short-maturity, highly liquid instruments. Growing stablecoin reserves can deepen demand for bills without creating an equivalent buyer for longer-term notes and bonds.

The GENIUS Act could lock in demand for Treasury bills

Regulation adopted in 2025 may reinforce that short-maturity bias rather than broaden it. The GENIUS Act created a federal framework requiring approved US payment stablecoin issuers to fully back outstanding tokens with eligible liquid reserves, with proposed implementing rules covering Treasury bills, notes and bonds maturing in 93 days or less, alongside cash, bank deposits and certain Treasury-backed repos.

That structure ties regulated dollar stablecoin growth directly to incremental demand for the shortest-dated government securities. Issuers also benefit economically, since customers typically earn no yield on their tokens while issuers collect the interest on the Treasuries backing them.

The San Francisco Fed pointed to rising stablecoin use for cross-border payments and as a dollar store of value in countries with volatile currencies, particularly across Africa, the Middle East and Latin America. Extending the industry’s recent growth rate would lift stablecoin issuer Treasury holdings toward $400 billion by 2030, though researchers cautioned the estimate carries substantial uncertainty given competition from bank payment technology and foreign regulation.

The BlockWest read. For bank treasury desks and Treasury auction planners, this is a reminder that short-bill demand is becoming structurally linked to stablecoin circulation rather than purely to rate expectations. If GENIUS Act implementing rules get finalized as proposed, issuers become a semi-automatic bid for T-bills every time global dollar-token demand rises, a dynamic Treasury’s debt managers will need to model explicitly.

Whether stablecoin issuer Treasury holdings actually reach the San Francisco Fed’s $400 billion projection by 2030 depends on adoption outside crypto trading, including cross-border payments and remittances, and on competing pressure from banks building cheaper settlement tools and from foreign regulators who could restrict dollar-token use.

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