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The U.S. Treasury holdings of four stablecoin giants have piled up, surpassing Saudi Arabia's $133.8 billion and are charging towards Norway's $195.9 billion. This is not a capital game but a silent transfer of sovereign financial power.
In the smoke-filled summer of 2025, a piece of data struck the crypto world like lightning: the total U.S. Treasury holdings of four dollar stablecoin issuers reached $182.4 billion, officially surpassing the sovereign reserves of South Korea and the UAE, ranking them 17th among global U.S. Treasury holders.
Tether leads the way, holding over $125 billion in U.S. Treasuries, crushing the $111.4 billion held by Germany in just five years — the latter being the backbone of the European economy. Circle, First Digital, and Paxos follow closely behind, building a moat for the crypto world with real U.S. Treasuries.
U.S. Debt Black Hole: Stablecoin Issuers Have Become Sovereign-Level Players
While the traditional financial community still debates whether the crypto sphere is self-entertaining, stablecoin giants have quietly taken center stage in the global bond market. The U.S. Treasury holdings of the four leading issuers are enough to dwarf most central banks.
Tether's U.S. Treasury holdings surpassed $120 billion in Q1 2025, and by late May, it increased to over $125 billion, making it the 19th largest holder of U.S. Treasuries globally. Circle allocated $28.7 billion in government bonds and $26.5 billion in repurchase agreements for USDC reserves, playing traditional financial instruments with great skill.
Even more astonishing is the growth curve: Standard Chartered Bank predicts that by 2028, the total market value of stablecoins will soar from the current $230 billion to $2 trillion, with corresponding demand for U.S. Treasuries reaching $1.2 trillion to $1.6 trillion. This means stablecoins will become a third force in the U.S. Treasury market, rivaling traditional banks and sovereign funds.
The Federal Reserve must confront the reality: stablecoins now account for 1% of the U.S. M2 money supply, a 40.9% increase in just one year. As the digital dollar rushes on-chain, Wall Street's treasury is being reconstructed.
Regulatory Changes: The GENIUS Act Ignites the U.S. Treasury Engine
On May 20, 2025, the U.S. Senate passed the GENIUS Act with a vote of 66 to 32, pressing the accelerator on this capital frenzy.
The core of the bill is like a tailored wedding dress for U.S. Treasuries: it mandates that over 90% of the reserve assets of stablecoins must be short-term U.S. Treasuries, allowing only cash, government bonds maturing within 93 days, and money market funds. This essentially sets up a "rigid demand generator" for the U.S. Treasury market.
More subtly, the regulatory double-edged sword: on one hand, prohibiting tech giants from issuing stablecoins (the dreams of Facebook's Libra are completely shattered), and on the other hand, granting FinCEN new powers to regulate DeFi tools. When algorithmic stablecoins are explicitly banned, U.S. Treasuries become the only legally acceptable anchor.
U.S. Treasury Secretary Janet Yellen testified in Congress: "Stablecoins are a strategic tool to defend the dollar's hegemony," and the potential demand for digital assets in U.S. Treasuries could reach $2 trillion. When policymakers view stablecoins as a "digital Trojan horse," the walls of traditional finance have begun to crumble.
Crypto infrastructure: Stablecoins have become the blood of the on-chain world
Today's stablecoins have long surpassed mere trading mediums, transforming into the underlying financial infrastructure of the crypto world. USDT and USDC dominate over 80% of trading pair liquidity on global exchanges, becoming the de facto "on-chain dollar."
Data reveals a shocking reality: by 2024, the settlement value of stablecoins will exceed $24 trillion, surpassing the combined total of Visa and Mastercard, and reaching 80% of U.S. GDP. While traditional payment networks still charge fees of 100-300 basis points, the transaction cost of stablecoins has dropped below 1 cent.
Market volatility reveals the truth: In August 2023, the S&P 500 index plummeted 3.9% in a single day, while the inflow of USDT into exchanges surged by 15% within 24 hours. Crypto investors have developed muscle memory: sell stocks → buy stablecoins → bottom fish crypto assets, a seamless process.
The dominance of stablecoins has become a market barometer. When this metric surged to a six-month high of 8.2% in November 2023, the Nasdaq index fell by 2.1% six hours later. Savvy traders have learned to use stablecoin liquidity to predict macro changes.
Political whirlpool: The Trump family's entry ignites a conflict of interest
When the regulatory framework is established, power players flock to the scene. In March 2025, the world freedom finance (WLFI) supported by the Trump family launched the USD1 stablecoin, backed 1:1 by "short-term U.S. Treasuries + U.S. dollar deposits."
The project raised over $500 million through token sales, and the Trump family has accumulated nearly $1 billion in the crypto sector. Democratic Congresswoman Maxine Waters denounced this as "the embodiment of greed and corruption," pointing directly to the conflict of interest between Trump's push for deregulation and family cryptocurrency issuance.
More sensitive is WLFI's capital operations: purchasing $20 million in tokens just before Trump attended a crypto summit, accompanied by policy benefits that released severe price volatility. When the presidential family becomes a stablecoin dealer, the ideal of "decentralization" shatters in the face of real politics.
In the legislative game, the Democratic Party's proposal to restrict politicians' affiliated companies from issuing stablecoins was defeated. Senator Elizabeth Warren warned: "Loopholes could turn cryptocurrencies into private vaults." The entanglement of politics and capital is bound to be a long-term variable in the stablecoin market.
Future wars: $6.6 trillion deposit migration and RWA explosion
A true financial earthquake is brewing — Bank of America Securities' latest research report indicates that the expansion of stablecoins could lead to a loss of $6.6 trillion in deposits in the banking industry, of which $5.7 trillion are demand deposits.
This is a disaster for small and medium-sized banks: they account for 60% of small business loans and 80% of agricultural loans in the U.S. When deposit outflows impact lending capacity, the real economy will face a chain reaction. Imagine: farmers paying for rental equipment with USDC, tech companies securing DAI loans using on-chain Treasuries as collateral — traditional banks are systematically bypassed.
The tokenization of real-world assets (RWA) will further fuel the fire. The Hong Kong Monetary Authority plans to issue RWA operational guidelines in 2025, promoting the on-chain of a $16 trillion market including bonds and real estate. As tokenized U.S. Treasuries soar from $769 million in 2024 to $3.4 billion in 2025, the moat of traditional finance is being drained by blockchain.
Citibank predicts: under a scenario of regulatory clarity, the market value of stablecoins will reach $1.6 trillion by 2030, with the locked amount of stablecoins in DeFi protocols exceeding $500 billion. By then, on-chain U.S. Treasuries will not only be a safe-haven asset but also become the cornerstone of a new financial civilization.
The nightmare of the banking industry is manifesting: Bank of America Securities estimates that $6.6 trillion in deposits could flow from the banking system to stablecoins, of which $5.7 trillion is the most precious demand deposits. When small-town business owners pay Vietnamese suppliers with USDC and Texas farmers borrow against on-chain Treasuries, the death knell for traditional banks has already sounded.
We are witnessing a silent financial revolution, and this time, the banner of change reads "decentralization," yet it is planted on the summit of U.S. Treasuries.
Coiled Commentary:
When Tether's U.S. Treasury holdings surpass Germany
When the Trump family stuffs USD1 into voters' wallets
When the GENIUS Act sweeps algorithmic stablecoins into the grave
The crypto sphere is no longer a geek playground
This is the birthplace of a new order
And also the graveyard of old hegemony