Stablecoin Issuers Add $200 Billion in Treasuries—Offsetting 40% of China’s Pullback

Stablecoins are quietly becoming a meaningful buyer of U.S. government debt.

A new Federal Reserve Bank of San Francisco study finds that the two largest dollar stablecoin issuers increased their Treasury holdings by roughly $200 billion over the past five years. That is equal to more than 40% of the decline in China’s Treasury holdings during the same period.

That does not mean stablecoin companies have simply replaced China. The maturities are different, and the overall Treasury market is far larger.

But it does show how crypto infrastructure is beginning to matter well beyond crypto trading.

The researchers also found that stablecoin issuers have increased their short-term Treasury holdings by more than Japan since 2023. Tether and USDC together accounted for more than 80% of stablecoin market capitalization in mid-August.

The study projects that issuer demand for U.S. debt could reach about $400 billion by the end of 2030 if the recent growth trend continues. It also warns that the estimate is uncertain and remains small compared with the federal government’s total financing needs.

Stablecoin reserves are becoming a real Treasury buyer.

Dollar stablecoins promise holders that one token can be redeemed for one dollar. To make that promise credible, issuers need liquid reserve assets that can be sold quickly when customers redeem.

Short-term Treasury bills are a natural fit.

The San Francisco Fed’s researchers focused on Tether and USDC, which together represented more than 80% of stablecoin market capitalization as of mid-August. Their Treasury and repurchase-agreement holdings grew more than tenfold over five years, according to the study.

The shift has happened as foreign official demand changed. Foreign investors held more than half of outstanding U.S. debt around 2008; by early 2026, that share had fallen to roughly 30%.

China’s holdings have dropped by more than half from their late-2013 peak.

Stablecoin issuers are not buying the same mix China sold. China’s reduction was concentrated more heavily in longer-dated securities, while stablecoin reserves favor short-term bills and other highly liquid instruments.

Still, the $200 billion increase is large enough to show up in the composition of Treasury demand.

Regulation is pushing reserves toward liquid assets.

The reserve model is becoming more formal. The 2025 GENIUS Act created a federal framework that will require approved domestic issuers to back payment stablecoins one-for-one with high-quality liquid assets, including Treasury bills.

Europe is wrestling with similar questions about reserve liquidity and market structure. Circle said this week that it submitted feedback to the European Commission’s review of MiCA after operating USDC and EURC under the regime for two years.

Circle has submitted its response to the European Commission’s MiCA Review Consultation.

Our feedback draws on two years of experience operating USDC and EURC under MiCA, with a focus on strengthening Europe’s role as a dynamic, liquid stablecoin market.

In the response, we…

— Circle (@circle) October 1, 2026

Circle’s European policy lead, Patrick Hansen, emphasized that the company is already a regulated issuer of both dollar- and euro-denominated tokens under MiCA. That experience matters because reserve rules determine where billions of dollars ultimately sit.

🇪🇺 We submitted feedback to the European Commission's MiCA Review Consultation

As the largest MiCA-regulated e-money token (EMT) issuer for both the dollar (@USDC) and the euro (EURC), and having been the first major global issuer to comply back in July 2024, @circle knows… pic.twitter.com/YvEME8czAr

— Patrick Hansen (@paddi_hansen) October 1, 2026

The $400 billion question.

If the recent trend continues, the San Francisco Fed estimates stablecoin issuers’ Treasury demand could reach roughly $400 billion by the end of 2030. The researchers are careful to call that a simple projection, not a promise.

Growth depends on regulation, competition from banks, and whether stablecoins draw genuinely new dollar demand or merely redirect money that would have owned Treasuries another way. Redemptions also cut both ways: inflows can add demand for bills, while rapid outflows can force issuers to sell.

The larger point is hard to miss. Stablecoins are no longer just chips used inside crypto markets.

Their reserve portfolios are becoming part of the machinery that finances the U.S. government—and the bigger the market gets, the more consequential that connection becomes.

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