Stablecoins as a Structural Buyer of US Treasuries and the Case for BitBonds
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Cliff-Notes:
- The Treasury Borrowing Advisory Committee has formally recognized stablecoins as structural buyers of US debt, projecting ~$900 billion in T-Bill demand if stablecoins reach $2 trillion by 2030.
- BlackRock and Franklin Templeton’s tokenized MMFs are also funneling institutional capital into short-duration Treasuries through digital rails.
- With allocators increasingly demanding bitcoin-adjacent fixed income products, the US may soon turn to a bitcoin-backed sovereign bond, BitBonds, to bring in a new class of structural buyers as sovereigns become less reliable amid a changing global economic order.
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The Treasury is onboarding a new class of buyer, and they’re not coming from Beijing, Tokyo, or London.
In its latest quarterly presentation, the Treasury Borrowing Advisory Committee (TBAC)—the panel of dealers and bankers who advise the US government on how to fund itself—confirmed what many have been predicting for years: stablecoins are now some of the largest structural buyers of US Treasuries.
The math is simple. As of today, the stablecoin market sits at a $242 billion market cap, and more than $120 billion of that backing is parked in short-duration US government debt—primarily 93-day T-Bills, overnight repos, and money market funds. But the projection is what matters: if the stablecoin market hits $2 trillion by 2030—as is expected under continued adoption and new regulation—then the US could see $900 billion in additional T-Bill demand, all driven by new reserve requirements under the proposed GENIUS Act.
This has shifted from a concept to something that is underway as we speak. Stablecoins are both digital US dollars and digital-native lenders to the US government. Look beneath the surface of any major stablecoin issuer’s balance sheet, and you'll find lots, and I mean lots, of T-Bills.
As of December 31st, 2024, Tether, the largest stablecoin issuer in the world, reported $157.6 billion in total assets against $137.6 billion in outstanding tokens. That makes it one of the most overcollateralized institutions in the dollar system. But it’s what Tether holds that matters most: of that $157.6 billion in backing, $94.47 billion is in US Treasury bills alone.
That’s more than the sovereign holdings of countries like the Netherlands, Australia, Spain, or Italy. It puts Tether in the same league as the largest global holders of US debt, ranking 23rd on the list behind Mexico, except it doesn’t show up in the TIC data or make headlines in The Wall Street Journal.
And it’s not just Treasuries. Tether’s asset base also includes $14.10 billion in overnight reverse repos, $6.51 billion in money market funds, $3.08 billion in term reverse repos, $108 million in bank deposits, $7.86 billion in bitcoin, and $5.32 billion in gold:
What this means is that digital dollars are already intermediating US debt, and at a scale few understand, and Tether is just one issuer.
Circle, the company behind USDC, discloses similar reserve structures, with the vast majority of its backing held in the USDC Reserve Fund, managed by BlackRock and invested in, unsurprisingly, short-duration Treasuries and repos.
Together, stablecoin issuers are quietly becoming one of the most consistent sources of demand for US sovereign debt. They don’t need yield; they need safety, liquidity, and regulatory compliance. Which means as the stablecoin market grows from ~$234 billion today to a projected ~$2 trillion by 2030, so too will their guaranteed purchases of Treasuries, purely by function of their reserve requirements.
The Treasury market has long relied on foreign central banks, commercial banks, and domestic institutions to fund deficits. Now, it’s onboarding a new class of buyers: dollar stablecoin issuers, regulated by legislation like the GENIUS Act and required to hold risk-free short-term US government debt to legally exist. And unlike traditional buyers, they don’t toggle risk preferences; they just buy automatically, programmatically, and perpetually.
And it’s not just stablecoin issuers who are forming this new structural demand side for USTs; Wall Street is also coming aboard.
BlackRock’s BUIDL fund, a tokenized money market fund, attracted $240 million in its first week alone. Franklin Templeton’s BENJI, representing shares in its 40-Act government MMF, is now live. These are yield-bearing instruments that hold the same collateral as stablecoins—Treasuries, repos, and bank deposits—but cater to a different audience: institutions seeking regulated exposure to dollar liquidity and real yield, without leaving the digital ecosystem:
For institutional allocators, the decision matrix is shifting. Stablecoins offer liquidity, while digital-native MMFs offer yield. Both absorb Treasuries, both are digital-native, and both are growing exponentially.
The TBAC calls this a convergence, where the lines between payment stablecoins, yield-bearing digital-native MMFs, and cash-equivalent collateral pools blur into a singular digital rail, all backed by the US Treasury. And with these two buyer bases scaling programmatically, the next shift is obvious.
Let’s zoom out and take a look at bitcoin. Spot bitcoin ETFs now hold over 1.2 million BTC, well over a hundred thousand larger than Satoshi's holdings, making them the single-largest holding cohort in the world. Strategy’s convertible debt is oversubscribed every time it hits the market. Metaplanet is issuing paper in Japanese capital markets to accumulate BTC, mirroring MSTR’s playbook. Rumors persist that the UAE holds over 300,000 BTC, the US and China are virtually neck and neck in their holdings of ~200,000 each, and Russia may not be far behind.
Bitcoin is no longer speculative; it’s strategic collateral. And the buyer base has shifted from individuals to institutions, to sovereigns.
So what’s stopping the US from tapping into this pool?
A US BitBond, a Treasury-issued, bitcoin-collateralized, dollar-denominated bond, could bridge the gap. It would issue debt in dollars, custody BTC with multisig, and attract bitcoin-rich allocators who want dollar yield but don’t want to sell their bitcoin, and institutional allocators with fixed income mandates who want bitcoin exposure. Most importantly, it would preserve Treasury market demand in a world where foreign central banks are increasingly unreliable net buyers:
The fiscal trajectory is clear. The US is running trillion-dollar deficits as far as the eye can see, and in 2025 alone, it must roll over $6.15 trillion in Treasury bills and $2.34 trillion in maturing notes and bonds. If all of that were refinanced at today’s rates, it would add $343.7 billion in annual interest expense, and that's before a single dollar of new debt is issued or auction sizes are increased. Thankfully, rates are coming down, but the world is changing. As the world goes through a state change and a bona fide tariff war rages on, new demand for US Treasuries is a critical fail-safe at best and a necessity at worst:
Foreign official sector buying is stagnating from nations like the UK and has been in a secular decline among our largest buyer, China. Stablecoin issuers have stepped in on the front-end. Tokenized MMFs are absorbing the middle. Bitcoin ETFs are saturating institutional demand.
The next leg is sovereign. A BitBond wouldn’t just plug the funding gap, it would unlock a new buyer class, orthogonal to credit risk, disintermediated from currency debasement fears, and motivated both by US policy and by global trust in bitcoin’s integrity.
And the Treasury wouldn’t have to do it from scratch. The playbook is written. Strategy proved the model, many are replicating it, and the US could outcompete them all. Because the future of sovereign debt isn’t about who has the lowest yield, it’s about who has the strongest collateral. And in the eyes of a new generation of allocators, bitcoin is as strong as it gets.
Stablecoins are already underwriting T-Bills. Tokenized MMFs are already absorbing yield-hungry capital. Spot ETFs are already locking up BTC. Now it’s time for the Treasury to look at what’s next.
Stablecoins fund the short-end, tokenized money market funds soak up the middle, and BitBonds could close the long-end, and tap the hardest asset on Earth.
It’s no longer about if. It’s about when.
Take it easy,
Joe Consorti
Theya is the simplest way to take full control of your bitcoin. With our flexible multi-sig vaults, you decide how to secure your keys.
Whether you prefer keeping all keys offline, shared custody with trusted contacts, or robust mobile vaults across multiple devices, it's always Your Keys, Your Bitcoin.