Stablecoin Slowdown Could Undercut Treasury Sales

A slowing stablecoin market could dampen the U.S. Treasury’s plan to sell government debt.

That’s according to a report Friday (Sept. 4) by Bloomberg News, which noted that a downturn in cryptocurrency trading has crimped demand for stablecoins, in turn lessening a source of demand for government debt.

The world’s largest stablecoin, Tether’s USDT, fell by nearly $3 billion to around $184 billion in the first six months of the year, the report said. That puts it on pace to contract for the first time since the 2022 crypto crash.

Tether rival Circle’s USDC declined by a similar amount to around $72 billion, the report added. Together, the two companies account for the bulk of stablecoins in circulation.

Last year, Treasury Secretary Scott Bessent said the stablecoin market could jump tenfold to $3 trillion by the end of the decade, the report said, something that could potentially create a new source of demand for the $7 trillion in outstanding short-term Treasury bills.

Tether and Circle say they own a respective $134 billion and $63 billion of Treasurys and reverse repurchase agreements collateralized by government debt, Bloomberg added.

One possible path to growth could be the use of stablecoins in transactions such as payments or cross-border remittances, the report said. Tether told Bloomberg it has been trying to hasten such adoption, which it said has been softening the impact of the crypto market downturn.

“The current pause in stablecoin growth should not be mistaken for a ceiling on Treasury demand,” the company said.

In other stablecoin news, PYMNTS wrote last week about a recent announcement from a group of 21 global banks who intend to create a company supporting a dollar-denominated stablecoin, with a planned launch in the first half of next year. Additional G7 currencies are due to follow.

“For institutional users, however, more credible tokens do not automatically create a better payment system,” that report said, citing data from the March installment of PYMNTS Intelligence’s 2026 Certainty Project.

In that report, titled “Waiting for Certainty: Why Most CFOs Are Holding Back on Crypto and Stablecoins,” most middle market companies surveyed said they were still hesitant when it comes to using digital assets. Usage is limited, with 13% of firms employing stablecoins and 5% using other cryptocurrencies.

“A multinational doesn’t necessarily want 20 varieties of digital dollars sitting across separate wallets, blockchains, banks and liquidity pools,” PYMNTS added. “It wants to move value to the right counterparty, in the right currency and jurisdiction, at the right cost — without caring about the infrastructure underneath.”