State Street Global: Stablecoins Will Drive Significant Additional Demand for U.S. Treasuries

According to ChainCatcher, foreign media reports indicate that at a money market fund conference held in Boston this week, the potential for stablecoins to drive a surge in demand for short-term U.S. Treasuries became a hot topic.

Investors attending the event expect that later this year, stablecoins will absorb a significant portion of U.S. Treasury supply. Stablecoins are typically pegged to highly liquid assets such as the U.S. dollar, and to maintain a 1:1 value peg, issuers must hold large amounts of highly liquid and safe reserves, which usually means purchasing U.S. Treasuries.

Yie-Hsin Hung, CEO of State Street Global Advisors, stated that stablecoins are attracting substantial demand to the U.S. Treasury market. Currently, about 80% of the stablecoin market is invested in U.S. Treasury bills or repurchase agreements, with a total market size of approximately $200 billion. Although this accounts for less than 2% of the entire U.S. Treasury market, the growth rate of stablecoins is rapid and is likely to outpace the growth in Treasury supply.