Stablecoin Issuers and U.S. Treasury Notes: Market Trends and Regulatory Challenges

Stablecoin Issuers’ Growing Demand for U.S. Treasury Notes

Stablecoin issuers have become a notable force in the U.S. Treasury market, accumulating over $120 billion in U.S. Treasury notes. This makes them the 18th largest holders of U.S. debt globally, surpassing countries like Germany and South Korea.

Key Players in the Stablecoin Market

Leading the pack is Tether Ltd, the issuer of tether (USDT), holding approximately $91 billion in Treasuries. Circle, the issuer of USDC, follows closely with short-dated U.S. debt totaling $29 billion.

Legislative Progress on Stablecoin Regulation

Efforts to regulate stablecoins have been advancing in the U.S. political arena, with stablecoin legislation nearing enactment. Congressman Patrick McHenry expressed optimism about having a stablecoin law in place by the end of the year, though recent attempts to include regulations in essential bills have faced challenges.

Debt Concerns and U.S. Treasury’s Increasing Bond Supplies

The U.S. government debt has surpassed $34 trillion, growing at a rate of about $1 trillion every 100 years. Interest payments on the debt are projected to reach $892 billion in 2024, prompting the Treasury to boost bond supplies. The Congressional Budget Office warns that the national debt could reach $50 trillion by 2034, potentially causing market instability and economic uncertainty.

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