Tether Emerges as Top Buyer of US Debt Amid Declining Foreign Demand

The US federal debt has surpassed $39 trillion, but foreign ownership of US Treasuries has declined significantly over the past decade. In 2011-2012, foreign investors held nearly 49% of US Treasuries, but this number has dropped to around 30-32% today. Traditional foreign buyers like China are reducing their holdings, while domestic investors and the Federal Reserve fill the gap.

Tether, a stablecoin issuer, has emerged as a major buyer of US debt in 2024. The company purchased $33.1 billion in US Treasuries, making it one of the top net buyers of US debt this year. This shift could have significant implications for both crypto and traditional markets.

The relationship between Tether and US Treasuries is closely tied, as Tether backs its stablecoins with short-dated Treasuries. Increased adoption of USDT drives more Treasury purchases, creating a feedback loop that could further boost the demand for US debt.