Stablecoin Issuers Account for 2% of US Treasuries Market

Tether and Circle, among other stablecoin issuers, are currently holding $80 billion worth of short-term U.S. government debt, which shows how digital asset players are holding bigger roles in the traditional finance markets.

The Financial Times reported Friday (Aug. 19) that Tether and the other such companies made up around 2% of the market for treasury bills in May this year, according to research from J.P. Morgan.

Treasury bills are debt instruments that are commonly used as a cash equivalent for corporate balance sheets. J.P. Morgan said newer issuers would have a lot of room to grow if stablecoins became a more common form of payment.

As stablecoin issuers have become more prominent, there’s also been a call for regulators to find ways to create established rules for the coins.

Stablecoins, which are supposed to always be backed by reserves of highly liquid mainstream financial assets, saw a hiccup in those plans earlier in the year as Tether’s U.S. dollar peg buckled under selling pressure in the wake of the TerraUSD collapse.

The events in the crypto space prompted regulators, including U.S. Treasury Secretary Janet Yellen, to say that stablecoins had “rapidly growing risks.”

Stablecoins have seen some instability the same way other digital coins have as of late, with PYMNTS writing that the Acala Dollar, or aUSD, collapsed earlier in August as a hacker was able to mint $1.28 billion of the token.

Read more: Another Hack, Another Collapse as Stablecoin Woes Follow Familiar Pattern

The Acala Dollar collapsed from $1.03 to $0.009 within three hours on Aug. 13, with the problem seeming to come down to a coding error in the new liquidity pool supporting the ecosystem.

Because of this, an attacker was able to mint an “enormous” amount of aUSD stablecoins on the pool without putting up any of the collateral needed to keep up the peg with the dollar.

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