By Key Points
- Tether and Circle US Debt Surpasses Major Nations
- Stablecoin market could grow from $270B to $2T by 2028
- Transaction volumes now rival Visa’s global payments
- Institutional adoption surges after new US stablecoin law
Once just a niche tool for crypto traders, stablecoins have now muscled their way into the heart of global finance. The two biggest issuers, Tether (USDT) and Circle (USDC), are now holding more US Treasuries than several major countries combined.
And this is no small shift; it’s a sign that stablecoins are becoming a permanent fixture in the debt market, with implications stretching from Wall Street to central banks worldwide.
Tether and Circle Become Top US Debt Buyers
Stablecoins are designed to keep a fixed value, usually pegged to the US dollar, by holding reserves such as US Treasury bills (T-bills). That design has turned these crypto tokens into some of the largest private buyers of American debt.
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Tether now holds over $100 billion in T-bills, ranking 18th among all US debt holders and surpassing the UAE’s $85 billion.
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Circle holds $45–$55 billion, ahead of South Korea’s holdings when measured individually.
Combined, their holdings exceed the combined debt portfolios of Germany, South Korea, and the UAE.
This growth was accelerated by the recent GENIUS Act, which formally recognized stablecoins in the US financial system, sparking adoption among banks, payment processors, and Fortune 500 companies.
Analysts warn that while nearly 90% of stablecoin use today is tied to crypto trading, the real game-changer will be retail payments and cross-border transfers.
Top Foreign and Private Holders of US Treasuries as of Mid-2025
If US dollar stablecoins hit the projected $2 trillion market cap by 2028, their demand for T-bills could rival some of the largest sovereign debt buyers.
Some market analysts compare this moment to the high-profile BlackRock XRP ETF rejection, where a single regulatory move shifted billions in market expectations.
Stablecoin Market Cap. Source: DefiLlama – Techtoken
Stablecoins Rival Visa in Transactions
The stablecoin story isn’t just about reserves, it’s about usage.
In 2024, stablecoin transactions surpassed Visa’s by volume, thanks to their dominance in crypto markets and growing role in international remittances. Today, 49% of global institutions report using stablecoins for payments or settlements.
Their appeal is simple: near-instant settlement, low fees, and no reliance on slow, expensive systems like SWIFT. Big fintech bets, like Stripe’s $1.1 billion purchase of stablecoin startup Bridge, show how mainstream the technology is becoming.
Even major exchanges are expanding into decentralized platforms, with Coinbase DEX trading offering users direct blockchain settlement — a move that could further boost stablecoin usage.
This rise comes as some traditional foreign holders scale back:
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China’s US debt holdings fell from over $1 trillion a decade ago to $756 billion
- Japan, while still the largest holder at $1.13 trillion, is treading cautiously
Top Foreign and Private Holders of US Treasuries as of Mid-2025
For the US Treasury, stablecoin issuers offer a new, consistent source of demand, one that could reinforce the dollar’s dominance and even help lower long-term interest rates.
12/ Global Credit Allocators
If a fraction of stablecoin issuer reserves shifts from passive T-bill holdings to credit markets, stablecoin issuers can begin allocating credit at global scale.
Shrinking regional bank’s liquidity, evolving into global credit allocators &…
— nishil (@_nishil_) July 18, 2025
Yet skeptics warn of risks. Banking groups argue that stablecoins could siphon deposits from banks, while others fear that if trust in a major stablecoin wobbles, billions could shift out of T-bills overnight. Still, history shows similar fears around money market funds never materialized.
This pattern mirrors the uncertainty in other crypto markets, such as the XRP lawsuit dismissal, which also triggered rapid institutional reallocation.
13/ Looming Dollar Risks
• US debt now exceeds $36.2 trillion, or 122% of GDP, growing by $1 trillion every quarter.
• All three major credit agencies have downgraded US credit from AAA.Citi forecasts places Stablecoins amongst the top holders of US T-Bills, if US debt…
— nishil (@_nishil_) July 18, 2025
A New Force in Global Finance
The growing clout of Tether and Circle signals a shift in how capital flows between crypto and traditional markets. These companies didn’t exist during the last global debt cycle, yet now they sit beside nations in Treasury Department rankings.
Proponents say this is the “Eurodollar moment” for digital assets, similar to how offshore dollar markets in the 20th century cemented the US currency’s global power.
Stablecoins could offer a faster, programmable, and more transparent version of the same phenomenon, making the dollar even harder to challenge.
At the same time, their role as buyers of short-term US debt could make them an important stabilizing force, especially as traditional foreign investors diversify away from Treasuries.
If demand for T-bills from these issuers grows, it could help lower borrowing costs for the US government and tighten enforcement of sanctions worldwide.
The political and policy implications could also be huge, much like the Trump 401 (k) crypto move, which could redirect hundreds of billions into digital assets almost overnight.
And if stablecoins become more integrated with tokenized securities or IPO-linked projects like the Ripple IPO XRP impact, their demand for Treasuries could grow even faster than current projections.
But there’s a flip side. In a crisis of confidence, the speed at which stablecoin holders could dump T-bills might create sudden liquidity shocks. It’s a double-edged sword, one that regulators are watching closely.
What’s clear is that crypto-born institutions are no longer fringe players. With deep pockets and global reach, Tether and Circle are rewriting the balance of power in the US debt market, and they’re just getting started.
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