---
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"
date: 2026-09-07
canonical: "https://stockmark.it/stablecoin-slowdown-could-hinder-government-plans-to-sell-debt/"
category: "Cryptocurrency"
categories: ["Cryptocurrency", "Government", "US"]
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"
---

# Stablecoin contraction threatens US Treasury debt demand

**Published:** September 7, 2026
**Author:** Stockmark.IT Website
**Categories:** Cryptocurrency, Government, US
**Featured image:** ![Stablecoin contraction threatens US Treasury debt demand](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)

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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.

The 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.

Last 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.

One 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.

In 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.

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**Original URL:** https://stockmark.it/stablecoin-slowdown-could-hinder-government-plans-to-sell-debt/
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