The Rise of Stablecoins on the Global Financial Chessboard

With world powers such as China retreating from their US Treasury bond holdings, stablecoins are taking a leading role on the global financial stage. They now rank 16th among the world’s largest holders of these bonds, surpassing several major nations.

Stablecoins rank 16th among holders of US Treasuries

Thanks to their ability to maintain a constant value, stablecoins have appealed to many investors. Created by companies specializing in blockchain, these currencies guarantee their stability by backing them with robust financial assets such as US Treasury bills.

According to one study, major players in the sector, such as USDT, USDC, or DAI, with a combined market capitalization of around $120 billion, are reinforcing their position as one of the leading holders of these bonds.

In the early days of Bitcoin, doubts were expressed about the financial soundness of stablecoin reserves. Faced with these uncertainties, entities such as Tether (USDT) have decided to strengthen the security of their assets by investing in US Treasuries.

Today, with a circulation volume of $83.5 billion, it represents around 70% of the stablecoin market, Tether clearly dominates this sector. Its position has strengthened, while the impact of the USDC has fallen from 38% to 21% in 16 months.

According to research from Will Clemente, based on information from The Block, this valuation now places stablecoins as the 16th largest holder of U.S. Treasuries. With growing demand for these digital currencies, their influence on the market is set to increase.

Stablecoins stand out in the changing world order

Recent analyses have highlighted a change in the ownership of U.S. Treasury bonds. Japan and China, historically the two main foreign holders, have reduced their holdings. Conversely, in June 2023, the stablecoin market represented over $100 billion in U.S. Treasury bonds.

Currently, stablecoins surpass several countries in terms of holdings, including Norway, South Korea, Saudi Arabia, Germany and others. With growing demand for these currencies, they could strengthen their position and influence on the international financial scene.

In 2022, MakerDAO, at the origin of stablecoin DAI plans to allocate $500 million to US Treasuries and corporate bonds. Likewise, Tether, which issues USDT, reported holding nearly $72.5 billion to back its main product.

Nevertheless, despite the rise of stablecoins, countries such as Japan, China, and the UK remain among the top holders of US Treasuries.