Dollar Stablecoins Could Lift Treasury Demand

US Treasury Secretary Scott Bessent said at Ripple’s Swell conference that dollar stablecoins could extend the dollar’s global reach and increase demand for US government debt. He linked stablecoins, AI and semiconductors to US competition with China over technology and financial infrastructure, and said dollar-based tokens can give emerging-market users access to dollars outside traditional banks. More than 90% of stablecoins are dollar-denominated. The later report added estimates of the market’s potential financial impact. Stablecoins are valued at about $300 billion, with Tether and Circle together accounting for around 90% of the market and holding an estimated $170 billion to $220 billion in Treasuries and related assets. Issuers reportedly bought about $40 billion in short-term Treasury bills in 2024. A Standard Chartered forecast cited in the article projects a $2 trillion stablecoin market by 2028, potentially generating about $1 trillion in additional short-term Treasury demand. Under the GENIUS Act, payment stablecoin issuers must hold reserves that include cash and qualifying US Treasuries. Bessent also said the Treasury could work with the SEC and CFTC on crypto safeguards, including protections against firms losing access to banking. The broader CLARITY Act did not pass, and agency rules may be less durable than legislation. The outlook for stablecoin adoption and Treasury demand is positive, but large redemptions could force asset sales and heighten market stress. Regulatory durability and reserve liquidity remain key factors for traders.