Stablecoin Growth Extends Dollar Dominance, Boosts Treasury Demand

The growth of dollar-linked stablecoins is extending the influence of the U.S. currency beyond traditional payment and banking channels, according to Carolyn Wilkins, a Bank of England official.

The trend also ties the digital asset market more closely to U.S. government debt, creating both support for Treasury demand and potential risks during periods of market stress.

Tether's USDt and Circle's USDC are projected to hold nearly $150 billion in U.S. Treasury bills by end-2025 and buy around $33 billion more during that year.

The stablecoin market represents over $300 billion in circulation, with 98% pegged to the U.S. dollar, reinforcing dollar dominance and Treasury demand globally.