Stablecoin issuers are quickly emerging as a significant source of demand for U.S. Treasury bonds as concerns grow about Washington’s debt management.
According to data tracked by Tagus Capital, these issuers now collectively hold more than $120 billion in U.S. Treasury securities. That makes it the country’s 18th largest creditor in the world, ahead of countries with large current account surpluses such as Germany and South Korea.
Tether Ltd, the world’s leading issuer of USDT – the world’s leading dollar-pegged cryptocurrency by market value, holds approximately $91 billion in Treasuries. USDC issuer Circle holds US short-term debt including repo contracts, worth $29 billion, according to Tagus Capital.
Coincidentally, among the many cryptocurrency bills in the US political corridor, the stablecoin legislation is the closest to making it through the US Congress to become law. Hopefully the US will get new stablecoin legislation in place before this year’s election. In April, key congressman Patrick McHenry was optimistic that the US would have stablecoin legislation by the end of the year.
However, efforts to include stablecoin regulation in the reauthorization bill have failed. McHenry later said that “we are very close to this, we just need the legislative calendar to get things done in the Senate.”
He also echoed the sentiment of House Majority Leader, Republican Tom Emmer, who said the lame duck session could be the right time to attach regulation to a must-pass bill. The lame duck session occurs during the post-election transition period before the President-elect takes over in January 2025.
These main holder holds U.S. Treasury securities | Source: Tagus Capital
U.S. government debt surpassed $34 trillion earlier this year and is growing faster, about $1 trillion every 100 years. Interest payments on debt, also known as debt servicing costs, are expected to reach $892 billion by 2024. The ballooning debt has prompted the U.S. Treasury to boost bond supply votes from 2023.
On Tuesday, the Congressional Budget Office said the national debt could reach $50 trillion by 2034, or 122% of annual economic output.
Earlier this year, CBO had warning concerns that rising debt left unattended could lead to Liz-Truss-style market chaos, characterized by a sharp decline in the US dollar and political instability. Cryptocurrency experts have long echoed similar views, arguing that concerns about debt and loss of confidence in Treasuries could spur widespread adoption of alternative assets such as Bitcoin and Bitcoin. Yellow.
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According to Coindesk
