US Treasury Secretary: Digital assets could drive $2 trillion in Treasury demand, with stablecoins becoming a key driver
TechFlow Selected TechFlow Selected
US Treasury Secretary: Digital assets could drive $2 trillion in Treasury demand, with stablecoins becoming a key driver
"Digital asset demand for U.S. government bonds could surge in the coming years."
Navigating Web3 tides with focused insightsOriginal: cryptoslate
Compiled by: Blockchain Knight
U.S. Treasury Secretary Scott Bessent said demand for U.S. government bonds from the digital asset sector could surge in the coming years, potentially reaching $2 trillion.
Bessent made the remarks during a hearing before the House Committee on Financial Services on the global financial system, where he emphasized the growing financial significance of digital assets to the broader economy.
Bessent stated that the United States must take a leadership role in setting global standards for crypto asset markets, noting that the country has an opportunity to guide innovation while benefiting from it.
He pointed out that stablecoins and other blockchain-based financial products are becoming increasingly integrated with the U.S. dollar and U.S. Treasury market, indicating that digital assets can support America's national financial interests.
Stablecoin Growth Drives Treasury Demand
The bulk of the anticipated demand is expected to come from stablecoins. Currently, stablecoins heavily rely on short-term U.S. Treasuries to back their reserves.
As of the end of March, Tether, the world’s largest stablecoin issuer, held nearly $120 billion in short-term U.S. Treasuries as reserves for USDT. Meanwhile, Circle, the issuer of USDC, reported holding over $22 billion in U.S. Treasuries as of February 2025.
As stablecoin circulation grows alongside rising global demand, so does the need for low-risk assets such as Treasuries to serve as corresponding collateral.
The link between digital assets and the U.S. debt market is becoming increasingly strong, as private stablecoin issuers are emerging as consistent institutional buyers of U.S. Treasuries.
This emerging source of demand could add new resilience and liquidity to the U.S. Treasury market, especially amid widespread concerns about foreign investors' willingness to purchase U.S. government debt.
Congress Weighs New Legislation
Proposed legislation aimed at clarifying the role of stablecoin issuers within the U.S. Treasury market ecosystem further strengthens expectations of potential demand growth.
The STABLE Act of 2025 and the GENIUS Act of 2025, currently under congressional review, both require stablecoin issuers to fully back their tokens with high-quality, liquid assets—including short-term U.S. Treasuries.
However, these bills may face delays due to political divisions between Democrats and Republicans. Recently, nine lawmakers withdrew their support, citing insufficient investor protection rules.
If passed, these bills would effectively mandate the entire stablecoin industry to invest in Treasuries, thereby integrating digital dollars more deeply into the U.S. financial infrastructure.
Supporters argue that such requirements would enhance trust in stablecoins while reinforcing the dollar’s dominance in digital markets.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
@CryptoSlate
