CryptoSlate
Tether closed 2025 with more than $141 billion in direct and indirect US Treasury exposure, making it the 17th largest holder of American government debt and the top non-sovereign holder worldwide, the company disclosed. By March 2025, 81.5% of Tether's $149.3 billion in reserves sat in cash, cash equivalents, and short-term deposits — $98.5 billion in direct T-bills and $15.1 billion in overnight repo. Tether and Circle now collectively hold more US Treasuries than Saudi Arabia, according to the IMF's July 2025 External Sector Report.
The scale crystallized a structural shift that regulators spent a decade debating. The GENIUS Act, signed July 18, 2025, after a 68-30 Senate vote and 308-122 House vote, requires stablecoin issuers to maintain 100% reserve backing with liquid assets including short-term Treasuries and to publish monthly composition reports. Treasury Secretary Scott Bessent called the provision a "debt relief engine" on the day the Senate voted.
Why it matters
The reserve mandate turns stablecoin growth into a permanent source of Treasury demand. Analysts' base case now projects the stablecoin market reaching $1.9 trillion by 2030, which would mechanically pull hundreds of billions more into T-bills. Bessent's upside scenario puts the market at $3.7 trillion by 2030. Either trajectory arrives just as US deficit financing pressure is climbing.
The IMF and the US Treasury itself warned the same scale could pull up to $6.6 trillion out of bank deposits. Citi sees roughly $1 trillion gone by 2030; Standard Chartered sees $500 billion by end of 2028. The GENIUS Act's no-yield provision is the legislative concession to that risk — whether third-party platforms can route reserve yield back to holders is the rulemaking fight that will define 2026 and 2027.
Market impact
The system is now wired in both directions. Tether's model self-reinforces: more USDT demand globally means more cash, which means more T-bill buying. But a confidence shock to a major issuer would force Treasury liquidation into a market that may already be stressed, transmitting at machine speed across borders through 24/7 settlement rails the IMF says resemble money market funds more than actual money. Bessent's structural demand thesis and the IMF's systemic risk warning are both grounded in the same data — and the legislation has not resolved the tension.
Frequently asked questions
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How much in US Treasuries does Tether hold?
Tether disclosed more than $141 billion in direct and indirect US Treasury exposure at the close of 2025, ranking it the 17th largest holder of American government debt and the largest non-sovereign holder worldwide.
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What does the GENIUS Act require from stablecoin issuers?
Signed July 18, 2025, the GENIUS Act requires stablecoin issuers to maintain 100% reserve backing in liquid assets including short-term Treasuries and to publish monthly disclosures of reserve composition. It also prohibits issuers from paying yield directly to holders.
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How could stablecoins affect US bank deposits?
The US Treasury's April 2025 report estimated stablecoins could drain up to $6.6 trillion from the banking system. Citi projects roughly $1 trillion in deposit outflows by 2030, while Standard Chartered sees $500 billion by end of 2028.
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Why is the IMF worried about stablecoins?
The IMF's July 2025 External Sector Report warned the $305 billion stablecoin market could threaten traditional lending, hamper monetary policy, and trigger confidence-driven runs that force Treasury liquidations at machine speed across 24/7 settlement rails.
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What is the open rulemaking question under the GENIUS Act?
The unresolved fight runs through 2026 and 2027: whether third-party platforms and wallets can pay holders rewards funded by the yield on stablecoin reserves. The answer will determine whether stablecoins become genuinely competitive financial instruments or stay structurally constrained.
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