Stablecoins hold massive US debt
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Stablecoin issuers have emerged as the 18th largest holders of US Treasury debt, with holdings valued at more than $120 billion. Tether, the market leader, accounts for approximately $97.6 billion of this total. These firms back their digital currencies with short-term Treasury bonds to enhance user trust and strengthen their position within the global financial system.
However, this growing connection between cryptocurrency and traditional markets carries significant risks, as demonstrated by the dramatic collapse of TerraUSD (UST). Should confidence in a major stablecoin waver, as happened in that instance, issuers might be forced to rapidly liquidate their Treasury holdings, potentially destabilising the market. Nevertheless, the rise of stablecoins underscores the dollar's international supremacy – each token backed by US debt further reinforces America's monetary dominance.
