Stablecoins Fuel US Treasury's Short-Term Bond Buying Spree

For the first time in modern history, gold held by global central banks has surpassed US Treasuries. The US government is struggling to find buyers for its debt due to a decline in foreign central bank purchases and the rise of Cayman Islands leveraged hedge funds that buy and sell Treasury futures.

The GENIUS Act, passed under Trump's administration, requires stablecoin issuers to back their tokens with short-term Treasuries. This means that every USDC token held by users is essentially a proxy for holding a short-term Treasury bond.

Stablecoin holders have become the new 'locked-in buyers' of US government debt, making them harder to flee collectively than any central bank. The demand for short-term Treasuries isn't equivalent and must be split into domestic and offshore capital.