US Treasury Officials Warn of Stablecoin Risks as Legislation Nears
Stablecoins are increasingly intertwining with the short-term government debt market, raising alarms among US Treasury officials and analysts. Proposed legislation, which could pass the Senate as early as next week, would mandate stablecoin issuers to back their tokens with highly liquid assets like US dollars and short-term Treasuries. This would further entrench stablecoins like Tether and Circle—already holding $166 billion in Treasuries—as major buyers of US debt.
The stablecoin market, currently valued at $247 billion, could balloon to $2 trillion by 2028 if the bill becomes law, according to Standard Chartered. Such growth WOULD amplify crypto's influence on traditional finance, potentially destabilizing the Treasury market's liquidity and safety.
