Key takeaways:
- The GENIUS Act requires payment stablecoins to hold reserves in cash-like assets, including Treasury bills with 93 days or less to maturity
- Stablecoin issuers historically held more than $120 billion in T-bills, a figure Treasury has modeled could approach $1 trillion by 2028
- The stablecoin market now exceeds $300 billion, with Tether and Circle together accounting for the bulk of it
Stablecoins are becoming an increasingly important part of the U.S. short-term government debt market, as rules under the GENIUS Act push issuers toward holding reserves in Treasury bills and other highly liquid assets.
The Act, signed on July 18, 2025, requires permitted payment stablecoins to maintain one-to-one reserves composed of cash, bank deposits, qualifying repurchase agreements, and Treasury securities with no more than 93 days remaining to maturity, along with qualifying money-market funds holding similar assets.
Treasury’s implementation rulemaking arrived on August 17, 2026, with the framework expected to take effect January 18, 2027, the date after which people generally cannot issue payment stablecoins in the U.S. without an appropriate federal or state license.
The numbers are already large
The stablecoin market now exceeds $300 billion, according to a Wall Street Journal analysis linking stablecoin policy to Treasury Secretary Scott Bessent’s approach to government financing.
The two largest tokens illustrate the scale: Tether ended June with $184.6 billion in USDT issuance, while Circle reported USDC reaching $72.7 billion as of August 20. Those figures come from different dates and shouldn’t be treated as a combined same-day total, but they underscore why the reserve behavior of both companies increasingly matters beyond crypto markets.
Tether says its reserves remain concentrated in short-duration liquid assets and U.S. government-backed instruments, while Circle says USDC reserves can include short-dated Treasuries, overnight Treasury repo and cash, held in part through the BlackRock-managed Circle Reserve Fund custodied at BNY Mellon.
A modeled scenario, not a forecast
The Treasury Borrowing Advisory Committee’s 2025 analysis estimated that stablecoin issuers historically held more than $120 billion in Treasury bills, against a T-bill market measuring roughly $6.4 trillion.
The same analysis modeled an illustrative scenario in which issuer holdings could reach $1 trillion by 2028, representing roughly $900 billion in incremental demand.
Treasury has stressed this is a modeling scenario tied to assumptions about rapid market growth, not an official forecast, and that it depends heavily on uncertain factors including adoption rates, regulation and reserve composition.
The committee’s more recent 2026 work found that Treasury bills make up 53% of assets held by Tether and Circle in its referenced dataset, with holdings rising by $70 billion since 2022.
Where the money comes from matters more than the total
Treasury’s advisory work draws a sharp distinction between different sources of stablecoin growth. Money entering from offshore users or people moving savings into dollars for the first time would represent genuinely new demand for T-bills.
Money shifted from existing money-market funds, by contrast, may simply relocate demand that already exists, since government MMFs already hold large quantities of bills and repo, and qualifying MMFs can themselves form part of stablecoin reserves.
A more disruptive scenario involves bank deposits. If money moves out of bank accounts and into stablecoins, banks could lose funding and be forced to raise deposit rates or turn to more expensive wholesale funding, even as issuer reserves flow into short-term government securities.
The advisory committee has flagged this dynamic as one that deserves close monitoring as the stablecoin market expands.
What it could mean for yields
A structurally larger buyer base could support Treasury bill prices and place modest downward pressure on yields at the front end of the curve, where GENIUS Act reserve rules concentrate eligible maturities. The three-month bill rate stood at 3.71% on a secondary-market discount basis as of August 20, according to Federal Reserve data.
But short-term yields are shaped by many forces beyond stablecoin demand, including Federal Reserve policy, Treasury issuance volumes, money-market fund flows, bank demand and foreign buyers, meaning even substantial stablecoin growth would not guarantee materially cheaper government borrowing on its own.
Bessent has already pointed to stablecoins as a potential source of structural Treasury demand, saying at the Treasury Market Conference that the department would adjust its approach over time if demand patterns for particular securities or maturities shifted.
The risk cuts both ways: large-scale stablecoin redemptions in a period of market stress could force issuers to sell Treasury holdings to raise cash, turning today’s buyers into sellers.