Stablecoin issuers become 18th largest holders of US Treasuries

Stablecoin issuers have grown to become the 18th largest holders of U.S. Treasuries, according to a recent report by Bernstein. 

The total circulation of stablecoins has reached an all-time high of $170 billion, marking a significant increase after a dip in 2023. 

The report highlights the essential role of dollar-pegged stablecoins in providing access to USD savings for international users, spreading digital dollars beyond the U.S. 

The report points out that stablecoins are increasingly being used for non-crypto purposes, such as cross-border payments and savings. 

“Stablecoin usage has decoupled from crypto and is increasingly being held for non-crypto use cases,” Bernstein stated. 

This shift is supported by data showing a record 22 million monthly active wallets holding stablecoins, despite fluctuations in trading volume. 

The report also notes the growing integration of stablecoins with payments and fintech platforms, such as PayPal’s USD (CRYPTO:PYUSD) stablecoin and USDC’s (CRYPTO:USDC) integration with major services. 

Tether (CRYPTO:USDT) remains the leading stablecoin, with $120 billion in circulation, followed by Circle’s (USDC) at $35 billion. 

Tether’s dominance is attributed to its widespread use in cross-border payments and integration with offshore exchanges. 

“Tether’s integration with global offshore exchanges and its cross-border payments usage in non-U.S. markets continues to be the key driver,” Bernstein added. 

New players are also making an impact, with PayPal’s PYUSD stablecoin approaching $1 billion in circulation. 

Stablecoin issuers continue to be highly profitable, benefiting from float income generated by U.S. Treasuries. 

According to the report, companies like Tether and Circle are reaping significant profits from these operations, ensuring stablecoin issuers’ growing influence in the financial landscape.