Dollar Stablecoin Boom Raises Concerns Over US Treasury Demand

The value of dollar stablecoins has reached about $300 billion in circulation, prompting a Bank of England policymaker to warn that their growth could increase demand for US Treasurys while creating new risks during periods of heavy redemptions.

Dollar-linked tokens account for approximately 98% of the global stablecoin market, with USDT and USDC holding nearly $150 billion in Treasury bills at the end of 2025. Their net purchases reached about $33 billion during the year.

The Bank of England's Financial Policy Committee member Carolyn Wilkins stated that large redemptions could force reserve sales and add pressure to stressed Treasury markets, potentially creating a feedback loop where stablecoin issuers buy more Treasurys, driving up demand and prices, but also increasing the risk of a large depegging event.

The GENIUS Act, enacted in July 2025, created a federal framework for US payment stablecoins and requires issuers to hold at least one dollar of eligible reserves for each dollar of tokens outstanding. The Office of the Comptroller of the Currency expects to finalize its stablecoin rules by November 2026.