Stablecoin Issuers Drive $200 Billion in Treasury Holdings

Tether and Circle, the issuers behind USDT and USDC, have added approximately $200 billion in Treasury and repo holdings over the past five years, according to a study by the San Francisco Fed. This growth represents more than 40% of the decline in China's US Treasury holdings over the same period.

While the comparison measures the scale of two opposite flows, it does not show that reserves released by China moved directly into stablecoins. The researchers note that China reduced its holdings mainly at the long end, whereas stablecoin issuers primarily bought Treasury bills and other short-maturity assets.

The study highlights that stablecoin issuers' Treasury holdings have increased more than tenfold in five years. Since 2023, they have added more short-term Treasury holdings than Japan, the largest foreign holder of US government debt.