Stablecoin issuers have replaced 40% of China’s lost US Treasury demand

Stablecoin issuers are emerging as a new source of demand for US government debt as foreign official holdings lose ground.Tether and Circle have increased their Treasury securities and repurchase-agreement holdings by about $200 billion over the past five years, equivalent to more than 40% of the decline in China’s Treasury holdings over the same period, researchers at the Federal Reserve Bank of San Francisco said.The shift is beginning to alter the investor base underpinning the world’s largest government bond market. Stablecoin issuers’ Treasury holdings have risen more than tenfold in five years as demand for dollar-linked digital tokens expanded, while China has continued a retreat from US debt that began more than a decade ago.Stablecoins gain ground as foreign governments retreatThe rise of crypto-linked buyers comes as the composition of US creditors undergoes a longer-term change that could affect how cheaply Washington can finance its deficits.Foreign investors held more than half of outstanding Treasury securities around 2008, but their share had dropped to roughly 30% by early 2026, the San Francisco Fed said. Within that group, foreign governments have declined even mo...