Stablecoin issuers are becoming a significant source of demand for U.S. government debt as foreign official holdings decline. Tether and Circle increased their Treasury securities and repurchase-agreement holdings by about $200 billion over the past five years, equal to more than 40% of the decline in China’s Treasury holdings, researchers at the Federal Reserve Bank of San Francisco said. Stablecoin (digital token designed to track an asset’s value) holdings of Treasuries have risen more than tenfold in five years as demand for dollar-linked tokens expanded. Foreign investors held more than half of outstanding Treasury securities around 2008, but their share fell to roughly 30% by early 2026. Foreign governments accounted for just above 40% of foreign Treasury demand by early 2026, compared with nearly all of it at their peak in the 1970s. China’s Treasury holdings peaked in late 2013 and had fallen by more than half by mid-2026 as Beijing diversified its reserves. Unlike central banks, private investors may demand higher yields when risks increase or competing returns improve, potentially making Treasury financing more sensitive to interest rates and perceptions of U.S. fiscal risk. Tether’s USDT and Circle’s USDC represented more than 80% of stablecoin market capitalization as of mid-August. Since 2023, stablecoin issuers have added more short-term Treasury holdings than Japan, the largest foreign holder of U.S. government debt, and their purchases have measurably affected short-term government bond yields, the San Francisco Fed said, citing Bank for International Settlements research. Stablecoins cannot fully replace China’s former demand because China reduced longer-dated debt while issuers primarily buy Treasury bills and other liquid, short-maturity assets. The GENIUS Act, adopted in 2025, established a federal framework requiring approved U.S. payment stablecoin issuers to fully back outstanding tokens with eligible liquid reserves. Proposed rules would allow Treasury securities with remaining maturities of 93 days or less, cash, bank deposits and certain Treasury-backed repurchase agreements. Extending the industry’s recent growth rate could lift stablecoin Treasury holdings toward $400 billion by 2030, although the researchers cautioned that the estimate is substantially uncertain. Adoption outside traditional crypto trading, particularly for cross-border payments and dollar-denominated savings in Africa, the Middle East and Latin America, will help determine how much future dollar-payment growth reaches Treasury markets.