Stablecoins Quietly Become US Debt Buyer of Last Resort

The US government is quietly relying on stablecoins to absorb some of its debt, according to Circle president Heath Tarbert's testimony before Congress. The GENIUS Act issuer framework requires stablecoin issuers to hold one-to-one permitted reserves, allowing regulators to supervise and ensure compliance with financial-crime laws.

This regulatory framework can improve reserve quality, shape where issuers locate their assets, and steer more issuer assets toward short-term safe instruments like Treasury bills. Stablecoins are increasingly being used as a means of payment, with the dollar accounting for 57.13% of allocated global foreign exchange reserves in the first quarter of 2026.

The latest COFER brief from the International Monetary Fund reveals that stablecoin market capitalization measures liabilities issued by private companies to token holders, with roughly 98% of stablecoin value denominated in dollars. This shows the dollar's dominance in private token markets.