The U.S. Treasury reported that as digital assets continue to grow, stablecoin adoption and cryptocurrency volatility could increase demand for Treasury bills.
The US Treasury acknowledged the boom in blockchain usage and cryptocurrency investment in its 2024 Q4 report. Stablecoins, tokens pegged to fiat currencies such as Tether (USDT) and Circles (USDC), have evolved into major players in this digital economy.
According to the 17-page document, these “stable cash-like” tokens will provide crypto traders and investors with a less volatile currency. Treasury experts estimate that cryptocurrency-stablecoin pairs account for 80% of all digital asset transactions.
Meanwhile, stablecoin issuers are gravitating toward holding short-term Treasury bills as a large portion of their token reserves. While 63% of Tether’s $120 billion of tokens are held in Treasury bills, the cryptocurrency operator has purchased $120 billion worth of U.S. Treasuries in preparation for the stablecoin.
Similar to crypto advocates, the Treasury Department said further upward trends in digital assets could lead to increased adoption of fiat-pegged cryptocurrencies. Unlike blockchain enthusiasts, federal researchers argue that the volatility and risks inherent in cryptocurrencies will cause a “flight to quality in U.S. Treasuries.”
As the market capitalization of digital assets expands, structural demand for U.S. Treasuries may increase, both as a hedge against downside price movements and as an on-chain safe-haven asset.
US Treasury
Investors hold over $176 billion in stablecoins across dozens of platforms and blockchain networks. Jurisdictions such as the European Union with crypto asset market regulatory frameworks have formally recognized virtual currencies tied to fiat currencies.
Bipartisan negotiations on a stablecoin bill are moving toward passage in the United States, with speculators saying lawmakers could allow banks to issue assets like USDT.
Amid the bullish mood in the stablecoin sector, new entrants have focused on individual products. Blockchain giant Ripple has released RLUSD, and the Trump administration’s World Liberty Finance is also reportedly considering launching a stablecoin.
