The U.S. Treasury has identified a notable trend in which the rising use of stablecoins is significantly increasing the demand for U.S. Treasury bills.

Treasury reports reveal that stablecoin assets now leverage approximately $120 billion in collateral tied up in T-bills and Treasury-backed repo transactions. This shift has resulted from stablecoins’ reliance on liquid, short-term assets like T-bills to maintain value stability in the crypto marketplace.

This trend presents both opportunities and risks. On one hand, stablecoin growth showcases a new source of demand for T-bills.

However, the U.S. Treasury warns that dependence on these assets could increase volatility, particularly if major stablecoins were to experience a loss of their peg or face sudden liquidation. Such scenarios could provoke a “fire sale” effect in T-bill markets, echoing patterns seen during previous financial crises such as the 2008 economic downturn​

Additionally, the U.S. Treasury has noted that Bitcoin’s expanding role in institutional investment could also bolster T-bill demand.

As crypto volatility prompts institutional investors to seek hedging instruments, T-bills may see even greater demand as reliable financial buffers against risk. This trend reflects how digital assets, from stablecoins to Bitcoin, are beginning to integrate with traditional financial markets, potentially altering T-bill issuance strategies going forward.​

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