Stablecoin Issuers Could Nearly Double Treasury Holdings by 2030

Stablecoin issuers have become a meaningful buyer of short-term U.S. Treasury securities, and the Federal Reserve Bank of San Francisco projects their demand could nearly double to about $400 billion by the end of 2030 if current growth trends hold.

The projection comes from a September 28 Economic Letter from the FRBSF, which documents how the largest stablecoin issuers, Tether and USD Coin, have expanded their Treasury holdings more than tenfold over the past five years. Together the two tokens make up more than 80% of stablecoin market capitalization, and both hold a large fraction of their assets in short-term Treasury securities to back their one-to-one convertibility to the dollar.

The demand growth has partially offset a decline in holdings from China, one of the largest foreign government holders of U.S. debt. Over the past five years, stablecoin issuers increased their Treasury security holdings by about $200 billion, which the FRBSF says is more than 40% of the decline in China's holdings over the same period.

The composition of that demand differs. China's decline has been mostly in longer-term debt, while stablecoin issuers concentrate their buying in short-term Treasury securities. Since 2023, stablecoin issuers have increased their holdings of short-term Treasury securities more than Japan, the largest non-U.S. holder of Treasury securities.

The GENIUS Act and the Reserve Backing

The GENIUS Act, adopted in 2025, provides a regulatory framework for stablecoins and requires domestic issuers approved under the Act to back stablecoin issuance one-to-one with high-quality liquid assets such as Treasury bills. The Act addresses the same run risk that applies to banks, which must hold sufficient liquidity to meet depositor demands. Stablecoin issuers face a similar exposure: if investors doubt they can redeem holdings at par value, issuers could face runs.

The FRBSF notes the stablecoin buying spree has been large enough to have a measurable impact on short-term government bond yields, citing research from the Bank for International Settlements.

Demand Drivers and Uncertainty

The continued growth of stablecoin demand for Treasuries depends on adoption worldwide and on the mix of investors. Stablecoins could attract new investors who do not currently hold Treasury securities, or they could offer current holders an alternative vehicle to hold the securities indirectly. Research from the International Monetary Fund shows stablecoin usage is higher relative to GDP in Africa, the Middle East, and Latin America, and most transactions are international, suggesting the tokens reduce the cost of cross-border payments including remittances. Stablecoins may also provide a safer store of value in countries where local currencies are volatile.

Other studies project even stronger growth in stablecoin issuers' demand for Treasury securities by 2030 than the FRBSF's own extrapolation. The FRBSF cautions that its projection embeds substantial uncertainty. Stablecoin market growth will depend on regulations adopted around the world and on competing products, and banks may introduce new technologies that ease cross-border digital currency payments and compete against stablecoins for those transactions.

The FRBSF's projection would make stablecoin issuers a more noteworthy source of demand for U.S. debt, though one that remains a small part of the U.S. government's financing needs. Federal debt held by the public has risen from about 35% of GDP in 2006 to roughly 100% today, while the share of U.S. debt held by foreigners has fallen from a peak of more than 50% around 2008 to roughly 30% in early 2026.