Stablecoins Drive Surge in Treasury Demand, Forecasted to Hit $400B by 2030

The Federal Reserve Bank of San Francisco has released an economic letter detailing the growing demand for U.S. Treasury securities by stablecoin issuers. Over the past five years, these issuers have increased their holdings of short-term Treasury securities by approximately $200 billion.

This shift is significant because it offsets more than 40% of the decline in China's U.S. debt holdings during the same period.

The San Francisco Fed notes that stablecoin issuers favor short-dated Treasury bills due to their need for highly liquid assets to back their one-to-one dollar pegs. The GENIUS Act, which formalized this approach, requires domestic issuers to back stablecoin issuance with high-quality liquid assets like Treasury bills.

The two dominant market players in the stablecoin space are Tether (USDT-USD) and USD Coin USDC, accounting for over 80% of stablecoin market capitalization as of mid-August 2026. The San Francisco Fed predicts that if recent growth trends continue, stablecoin issuers' demand for Treasury securities could nearly double to $400 billion by the end of 2030.

This expansion may be driven by cross-border use cases, particularly in regions with volatile local currencies where stablecoins reduce transaction costs and provide a more stable store of value. However, the report cautions that market growth will depend heavily on global regulatory developments and competition from banks introducing new cross-border payment technologies.