Stablecoins are driving major demand for US Treasury bills through large-scale reserve holdings.
New bills could require stablecoins to fully back tokens with US Treasuries and other safe assets.
Political hurdles may delay stablecoin rules but demand for US debt from the sector continues to grow.
The US Treasury market is poised for a potential $2 trillion boost in demand from the digital asset sector. This projection was presented during a recent House Financial Services Committee hearing on the global financial system. Treasury Secretary Scott Bessent highlighted the rising role of digital assets in traditional financial markets.
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The strongest demand is coming from stablecoin issuers. These digital currencies rely on low-risk assets to maintain value. US Treasury bills have become the preferred reserve asset. As of March, Tether, the largest issuer, held nearly $120 billion in short-term Treasuries. Circle, the firm behind USD Coin, reported over $22 billion in holdings as of February.
This growing reliance has transformed stablecoin issuers into consistent buyers of government debt. As stablecoin adoption increases globally, so does the need for matching reserves. That trend has made digital asset firms a new and significant presence in the Treasury market.
Legislation May Cement Market Integration
Two proposed bills could further strengthen the link between stablecoins and US debt. The STABLE Act and the GENIUS Act would require stablecoins to hold full reserves in high-quality liquid assets, including Treasury securities. These regulations also introduce annual audits for large issuers with more than $50 billion in market capitalization.
The GENIUS Act moved forward in the Senate, bringing it closer to a final vote. It also includes provisions for stablecoins issued internationally. The goal is to standardize how stablecoin issuers operate, while reinforcing their reliance on safe, liquid reserves.
If passed, the bills would effectively formalize Treasury holdings as a key part of stablecoin reserves. This shift would bring digital currencies deeper into the heart of the US financial system. At the same time, it may offer the Treasury market a new base of steady institutional demand.
Political Hurdles and Market Impact
Despite progress, political challenges remain. Nine lawmakers recently withdrew support from the STABLE Act. They cited a lack of sufficient investor protection measures. This political divide may slow the process of passing stablecoin legislation.
The digital asset sector continues to evolve. Meanwhile, major banks are preparing to enter the space. Bank of America is among those planning to launch a stablecoin. At the same time, Circle recently went public, with its stock gaining over 200% on the first day.
US dollar-linked stablecoins already make up over 96% of the global stablecoin market. Their total value stands at nearly $247 billion. With regulation and market growth aligned, that figure may soon rise above $2 trillion.
