$29 Billion Treasury Bill Sale Sparks Interest in Stablecoin Issuers

Foreign investors sold $29 billion of US Treasury bills in June, marking their second monthly reduction in a row. This trend has sparked interest in stablecoin issuers as potential buyers to back US debt. According to the Treasury International Capital report, foreign investors bought $181.4 billion of US equities and only $6.8 billion of long-term Treasuries in June.

Tether and Circle, two prominent stablecoin issuers, use a reserve model that channels backing money into Treasury bills or repo. Tether's second-quarter attestation listed $114.96 billion of direct Treasury bills, while Circle's reserve disclosures show most USDC backing sitting in the Circle Reserve Fund, managed by BlackRock.

Stablecoins can provide an alternative source of demand for government debt, as they can be redeemed for cash and may sell bills or allow them to mature. The next TIC release will cover July and is expected to shed more light on this trend.