Stablecoins Could Soon Replace China As Top U.S. Creditor

Treasury Secretary Scott Bessent views stablecoins as a strategic tool to boost U.S. Treasury demand ... More and strengthen dollar dominance. (AP Photo/Jacquelyn Martin)
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A powerful U.S. Treasury advisory group sees stablecoins emerging as a major new source of demand for government debt. With the market projected to reach $2 trillion by 2028—nearly all of it dollar-denominated—the implication is clear: current regulatory proposals could channel more stablecoin reserves into U.S. Treasuries than China currently holds.
At its meeting last week, the Treasury Borrowing Advisory Committee (TBAC)—comprising senior executives from BlackRock, JPMorgan, and other major financial institutions reporting to Treasury Secretary Scott Bessen—highlighted the stablecoin market as a rapidly expanding force in creating new Treasury demand. While the committee stopped short of making direct comparisons, its analysis suggests that if projected growth materializes and legislation like the GENIUS Act is enacted, stablecoin demand for Treasuries could rival that of traditional sovereign creditors.
The GENIUS Act, expected to pass in 2025, would regulate stablecoin issuers and link reserves ... More directly to short-term U.S. Treasuries.
Designing Demand for Treasuries
With the GENIUS Act expected this August, U.S. dollar stablecoin issuers will be required to hold reserves—including Treasuries—positioning them as major institutional buyers. That demand could surpass the $784 billion currently held by China, reshaping how the U.S. finances its debt.
This isn’t just regulatory housekeeping—it’s strategic fiscal architecture. “The ultimate design and adoption of stablecoins will drive the magnitude of impact they have on U.S. Treasury demand,” the TBAC wrote in its meeting minutes.
By designating T-bills with maturities under 93 days as eligible reserves, the proposed rules would position stablecoin issuers as key players at the front end of the curve. The GENIUS Act goes further, allowing those Treasuries to be used as repo collateral—making them even more attractive as backing for stablecoins.