BCGAME - Free 5BTC Daily Bonus!- Stablecoins boost demand for US Treasuries
- Tether stands out with vast reserve of securities
- Future regulations could shape the fate of stablecoins
The U.S. Treasury Department recently released a detailed 132-page report that points to a surge in demand for short-term government securities, driven by the rise of stablecoins. The document, prepared for the Treasury’s Borrowing Advisory Committee, delves into how Bitcoin and stablecoins are reshaping the broader financial environment.
The report highlights “modest growth in demand for short-term Treasury securities,” attributed to the rise of stablecoins. While the digital asset market is still small compared to traditional assets, it has seen significant growth. “Digital assets have experienced rapid growth from a small base,” the Treasury Department said, noting that while this growth has not supplanted demand for Treasury securities, it has influenced the market in other significant ways.
One of the most notable examples cited is Tether, the largest stablecoin by market capitalization. According to statements from Paolo Ardoino, the company’s CEO, Tether holds a substantial amount of its reserves in U.S. Treasuries, surpassing even nations such as the United Arab Emirates, Australia, and Spain. The Treasury estimates that approximately $120 billion in stablecoin collateral is currently invested in its securities, with Tether accounting for $81 billion of that amount.
With the total market value of stablecoins reaching over $177 billion, they play a crucial role, mediating over 80% of all cryptocurrency transactions. Their stability, compared to the volatility of other cryptocurrencies, makes them an attractive option for traders looking for a reliable intermediary currency.
However, the Treasury report also signals challenges ahead, noting that the fate of stablecoins will largely be defined by looming regulatory and policy decisions. “Medium-term regulatory and policy choices will determine the fate of this ‘private currency,’” the paper warned, emphasizing the historical risks associated with privately issued currencies.
Furthermore, the document mentions that structural demand for Treasury securities may grow as the digital asset market evolves. Bitcoin, for example, has the potential to serve as a hedge against price volatility and as an on-chain safe haven asset, strengthening the connection between the cryptocurrency market and traditional financial instruments.
