San Francisco Fed study finds stablecoin Treasury growth offsets China’s retreat

The US government has a new kind of lender, and it doesn’t fly a flag. A September 28, 2026 Economic Letter from the San Francisco Federal Reserve Bank found that stablecoin issuers have become a meaningful buyer of US Treasury securities. Their purchases have offset more than 40% of the decline in China’s Treasury holdings over the same stretch. The numbers behind the shift According to the San Francisco Fed’s research, stablecoin issuers increased their Treasury holdings by approximately $200 billion between 2021 and 2026. Most of that buying comes from the issuers behind the two largest stablecoins. Those two tokens have seen their Treasury holdings grow more than tenfold in five years. The buying has concentrated in short-term instruments. That makes sense given the business model: a stablecoin issuer needs to redeem tokens for dollars on demand. It wants assets it can turn into cash quickly. Since 2023, stablecoin issuers have bought more short-term Treasury bills than Japan, the largest non-US holder of Treasuries. If current trends hold, stablecoin issuer demand could rise to around $400 billion by the end of 2030. The researchers frame that as a projection that depends on t...