{"id":58455,"title":"Stablecoin contraction threatens US Treasury debt demand","publisher":"Stockmark.IT","author":"Stockmark.IT Website","published":"2026-09-07T05:35:47+00:00","modified":"2026-09-07T05:35:47+00:00","canonical_url":"https://stockmark.it/stablecoin-slowdown-could-hinder-government-plans-to-sell-debt/","markdown_url":"https://stockmark.it/stablecoin-slowdown-could-hinder-government-plans-to-sell-debt.md","json_url":"https://stockmark.it/stablecoin-slowdown-could-hinder-government-plans-to-sell-debt.json","category":"Cryptocurrency","categories":["Cryptocurrency","Government","US"],"featured_image":"https://i0.wp.com/stockmark.it/wp-content/uploads/2026/09/stablecoin-contraction-threatens-us-treasury-debt-demand.png?fit=1536%2C1024&quality=80&ssl=1","format":"news","language":"en-GB","content":"A recent downturn in the stablecoin market may undermine the United States Treasury’s strategy for selling government debt. A report published on Friday, 4 September, by Bloomberg News indicated that declining cryptocurrency trading activity has reduced demand for stablecoins. This reduction, in turn, has lessened a significant source of demand for government debt instruments.\n\nThe report highlighted that Tether’s USDT, the world’s largest stablecoin, saw its value fall by nearly $3 billion during the first six months of the year. This decline brings the total to approximately $184 billion, placing the asset on a trajectory to contract for the first time since the cryptocurrency crash of 2022. Tether’s rival, Circle, experienced a similar drop in its USDC stablecoin, which declined to around $72 billion. Together, these two entities account for the majority of stablecoins currently in circulation.\n\nLast year, Treasury Secretary Scott Bessent suggested that the stablecoin market could expand tenfold to reach $3 trillion by the end of the decade. Such growth was expected to create a new source of demand for the $7 trillion in outstanding short-term Treasury bills. Bloomberg noted that Tether and Circle hold $134 billion and $63 billion respectively in Treasurys and reverse repurchase agreements collateralised by government debt.\n\nOne potential pathway for future growth involves the use of stablecoins in transactions such as payments and cross-border remittances. Tether told Bloomberg that it has been attempting to accelerate such adoption, a move the company said has helped soften the impact of the broader crypto market downturn. The firm stated that the current pause in stablecoin growth should not be mistaken for a ceiling on Treasury demand.\n\nIn related developments, a group of 21 global banks recently announced plans to create a company supporting a dollar-denominated stablecoin. The launch is scheduled for the first half of next year, with additional G7 currencies expected to follow. However, a recent PYMNTS Intelligence report titled Waiting for Certainty found that most middle market companies remain hesitant about using digital assets. Only 13 per cent of surveyed firms employ stablecoins, while 5 per cent use other cryptocurrencies. The report noted that multinational corporations prefer to move value to the right counterparty in the correct currency and jurisdiction without managing complex underlying infrastructure."}