Stablecoins hold nearly $200 billion in US debt, but money funds bought the surge

According to CryptoSlate, money-market mutual funds absorbed approximately 85% of the US government's more than $550 billion in new Treasury bill supply during July and August. Deputy Treasury Secretary Francis Brooke stated that traditional cash managers accounted for the marginal demand behind the summer issuance wave. Meanwhile, stablecoin providers hold nearly $200 billion in short-dated US debt, though this figure measures a holdings stock rather than the summer purchase share.

Treasury noted that stablecoin reserves can be invested through government money-market funds and repurchase agreements, creating an overlap between buyer categories. For example, Circle reported that 84% of its USDC reserves were held in a Rule 2a-7 government money-market fund at the end of June. While stablecoin issuers are already material investors in short-dated government assets, their potential demand could expand further as regulations implementing the GENIUS Act are finalized.

Additional demand came from the Federal Reserve, which purchased over $300 billion in bills through September 22, and foreign residents, who increased their bill holdings by $38.8 billion in July following previous declines.