Stablecoin demand for U.S. Treasuries to hit $400B by 2030: San Francisco Fed

Stablecoin issuers are increasingly stepping in as buyers of short-term U.S. government debt , helping cushion the structural decline in Treasury holdings by major foreign central banks like China , according to the Federal Reserve Bank of San Francisco.Over the past five years, stablecoin issuers have increased their Treasury security holdings by around $200B—offsetting more than 40% of the decline in China's U.S. debt holdings during the same period, the San Francisco Fed said in a new economic letter. The shift is particularly pronounced at shorter maturities: since 2023, stablecoin issuers have increased their holdings of short-term Treasury securities more than Japan , the largest non-U.S. holder of Treasuries.The duration profiles differ sharply between these buyer categories. China has been reducing its longer-term Treasury bond holdings as part of a broader portfolio diversification effort, while stablecoin issuers heavily favor short-dated Treasury bills . This preference stems from the need to back their one-to-one dollar pegs with highly liquid assets. The 2025 GENIUS Act formalized this approach, requiring domestic issuers approved under the framework to back stablecoin issuance one-to-one with high-quality liquid assets such as Treasury bills.Tether () and USD Coin remain the dominant market players, making up more than 80% of stablecoin market capitalization as of mid-August 2026.Looking ahead, the San Francisco Fed said, if recent growth trends continue, stablecoin issuers' demand for Treasury securities could nearly double to roughly $400B by the end of 2030. Much of this expansion may be driven by cross-border use cases—stablecoin usage relative to GDP is higher in Africa, the Middle East and Latin America, where these digital assets reduce the cost of international transactions and provide a more stable store of value in countries with volatile local currencies.The report cautioned, however, that substantial uncertainty surrounds these projections. Market growth will depend heavily on global regulatory developments and competition from banks introducing new cross-border payment technologies. While stablecoins represent an increasingly noteworthy buyer pool for U.S. debt instruments, their total holdings remain a small fraction of the federal government's overall financing needs.Content provided by Seeking Alpha is intended for information purposes only, and that Seeking Alpha does not offer any personalist investment advice and is not a licensed securities dealer, broker, US investment adviser or investment bank.