Stablecoins Hold Nearly $200 Billion in US Debt Amid Rising Money Fund Demand

The stablecoin market has grown to play a significant role in US Treasury markets, holding nearly $200 billion in short-term government debt. According to recent data, money-market funds dominated the demand for new Treasury bill supply during July and August, absorbing approximately 85% of more than $550 billion issued.

This growth represents an 8% increase in bill supply over two months, with traditional cash-management vehicles accounting for most of the incremental demand. Stablecoin issuers' holdings are not directly comparable to this figure, as they represent accumulated positions rather than purchases during the summer issuance period.

Circle's USDC reserves provide a clear example of how stablecoins can overlap with government money-market funds and repurchase agreements. In its second-quarter filing, Circle reported that approximately 84% of USDC reserves were held in the Circle Reserve Fund as of June 30.