Although stablecoin issuers are currently only a small part of the Treasury market, they could become a much larger part under some external projections. However, such a large funding shift could have important implications for other parts of the economy, such as a possible reduction in the supply of credit.

by: Stefan A. Jacewitz

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Congress recently passed legislation (the GENIUS Act) that establishes a framework for the issuance of U.S. dollar stablecoins, a cryptoasset intended to maintain a stable value relative to some other asset. This framework could boost demand from stablecoin issuers for U.S. Treasuries, the deepest, most liquid market in the world.

The effect of U.S. dollar stablecoins on the Treasury market will depend on the stablecoin market's size and future growth. The current market for stablecoins is relatively small: Today, the entire U.S. dollar stablecoin market is around $250 billion. However, not all stablecoin issuers' assets are held in Treasuries. The largest U.S.-based issuer of stablecoins (Circle) holds around $20 billion in Treasury bills, or roughly half (43 percent) of their assets as of January 2025.[1] If all issuers held a similar proportion of their assets as Treasuries, they would hold around $125 billion in Treasury bills—less than 2 percent of the $6 trillion in outstanding Treasury bills.[2] While this sum is not negligible, the stablecoin industry is not as yet considered a major part of the Treasury-bill market, and issuer behavior likely has a limited effect on overall Treasury liquidity. Chart 1 shows that insurance companies hold about $650 billion in Treasury debt, or about five times more than stablecoin issuers.[3] Mutual funds, the largest private holders, hold about $4.5 trillion—about 36 times more than stablecoin issuers.