Stablecoin Treasury Demand Could Reach $400 Billion by 2030, San Francisco Fed Says

Stablecoin issuers could hold approximately $400 billion in short-term US Treasury securities by 2030 if recent growth trends continue, according to research from the Federal Reserve Bank of San Francisco. The projection highlights a shift in the US government debt market. Companies issuing dollar-backed cryptocurrencies, particularly Tether and Circle, have become significant buyers of short-term Treasury securities as demand for digital dollars expands.

In its September 28 research report, the San Francisco Fed estimated that the two largest stablecoin issuers increased their Treasury-related holdings by approximately $200 billion over five years. The trend could strengthen demand for Treasury bills, although economists caution that growth in stablecoin reserves does not necessarily create an equivalent increase in total demand for US government debt. Why Stablecoins Are Buying US Treasury Bills Dollar-backed stablecoins are designed to maintain a value close to $1.

To support redemptions, issuers hold reserve assets that can be converted into dollars when customers redeem tokens. Short-term US Treasury bills are attractive reserve assets because they are highly liquid, carry relatively low credit risk and mature within a limited period. Tether and Circle also use cash, bank deposits and repurchase agreements as part of their reserve arrangements.

As stablecoin circulation grows, issuers generally need additional reserves. If those reserves are invested in Treasury bills, new stablecoin issuance can translate into additional demand for US government debt. The relationship also works in reverse: substantial stablecoin redemptions may require issuers to use cash or liquidate reserve investments.

How Much US Debt Do Stablecoin Issuers Hold? The San Francisco Fed found that Treasury-related holdings at Tether and Circle had expanded more than tenfold over five years. Their combined increase of approximately $200 billion represented more than 40% of the decline in China's Treasury holdings during the same period.

However, the comparison requires an important qualification. China's reductions largely involved longer-term Treasury debt, while stablecoin issuers primarily accumulated short-term instruments. The two flows therefore affect different parts of the Treasury market.

IndicatorFindingIncrease in Tether and Circle Treasury-related holdingsApproximately $200B over five yearsGrowth in holdingsMore than tenfoldComparison with China's Treasury holdings declineMore than 40%Potential stablecoin Treasury demand by 2030Approximately $400BPrimary maturity preferenceShort-term Treasury securities Source: Federal Reserve Bank of San Francisco, September 28, 2026. Its comparison includes Treasury bills and certain repurchase agreements. The $400 billion figure is a conditional projection, not a guaranteed forecast.

It assumes that the recent expansion of stablecoin reserve holdings continues. Tether and Circle Are Major Treasury Market Participants Tether's reserve portfolio illustrates the scale of stablecoin-related demand. The company's second-quarter 2026 disclosure reported total assets of approximately $187.

75 billion and liabilities of $183. 64 billion. Tether also reported a reserve surplus of approximately $4.

11 billion. US government-backed instruments and short-term liquidity arrangements represented a substantial portion of its reserves. Circle follows a similar broad approach, although its reserve structure and disclosures differ.

According to Circle's transparency dashboard, USDC had approximately $72. 0 billion in circulation and $72. 2 billion in reserves as of October 22.

Its disclosed reserve categories include bank deposits, short-term Treasury securities and overnight Treasury repurchase agreements. Circle also publishes reserve information and obtains monthly independent assurance reports. These figures demonstrate why stablecoin reserve management increasingly matters to conventional financial markets.

Can Stablecoins Lower US Treasury Yields? Additional demand for Treasury bills can support their prices and, all else being equal, reduce their yields. However, the impact depends on where stablecoin buyers obtain their dollars.

If an investor sells another Treasury-backed investment to purchase USDC, the stablecoin issuer may simply replace an existing holder of government debt. In that situation, the net increase in Treasury demand could be limited. A different outcome is possible when stablecoin purchases are funded by reallocations from assets that do not already hold Treasury securities.

The Federal Reserve Bank of Kansas City has highlighted this distinction. Stablecoin growth may increase direct demand for government debt while reducing demand for bank deposits or other financial assets. That could also affect bank funding and the availability of credit.

Consequently, a larger stablecoin market does not automatically mean lower Treasury yields across every maturity. How the GENIUS Act Changes Stablecoin Reserves US regulation is becoming an important factor in how stablecoin issuers manage reserves. The GENIUS Act, enacted in July 2025, establishes a federal framework for payment stablecoins.

On October 21, 2026, the Office of the Comptroller of the Currency issued its final implementing rule, published in the Federal Register on October 23. The rule takes effect on January 18, 2027. According to the OCC's official announcement, covered issuers must maintain qualifying reserves backing outstanding payment stablecoins on at least a one-to-one basis.

Eligible reserve assets include specified high-quality liquid instruments such as short-term US Treasury securities. The framework also addresses liquidity, redemption procedures, reserve management and supervision. For the Treasury market, the implications are straightforward.

As more stablecoin issuers operate within a framework requiring high-quality reserves, their asset purchases could become a more consistent source of demand for short-term government securities. However, the size of that demand will still depend on actual stablecoin adoption and issuance. What Happens if Stablecoin Demand Declines?

Reserve growth can support Treasury demand, but large-scale redemptions introduce a different risk. When customers redeem stablecoins, issuers must provide the corresponding dollars. If available cash is insufficient, they may need to liquidate Treasury bills or other eligible reserve assets.

Under ordinary market conditions, short-term government securities are relatively easy to sell. During periods of financial stress, simultaneous redemptions across multiple issuers could increase pressure on liquidity. The risk depends on reserve quality, maturity distribution and access to cash.

This is one reason regulatory requirements for liquidity management and timely redemption matter. A properly structured reserve portfolio must support both routine withdrawals and periods of unusually high demand for redemptions. Could Stablecoins Become Major Buyers of US Debt?

The San Francisco Fed's $400 billion projection illustrates how much stablecoin issuers could grow as Treasury investors. Even at that scale, the sector would remain substantially smaller than the US government's overall financing requirements. The more immediate impact would likely be concentrated in Treasury bills rather than long-term bonds.

For financial markets, three indicators deserve attention: growth in USDT and USDC circulation, changes in reserve composition and the volume of stablecoin redemptions. Regulation will influence which reserve assets issuers can hold, while investor demand will determine how quickly those portfolios expand. Stablecoins are becoming a meaningful part of the short-term Treasury market, but their ultimate impact on yields and financial stability depends on where the underlying capital originates and how reserves behave during market stress.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.