Stablecoins will increase demand for US T-bills: Treasury Department
According to the US Treasury meeting minutes published on October 30, stablecoins appear to increase demand for short-term US government bonds known as Treasury bills.
At an Oct. 29 meeting, the US Treasury Debt Advisory Committee was weighing the benefits of stablecoin adoption and Treasury bill tokenization, with one member suggesting the US create a permissioned blockchain for T-bills, the minutes said.
The comments are the latest from U.S. government officials to indicate that blockchain technologies are just beginning to meaningfully integrate into the U.S. financial system.
“[B]ecause most stablecoin collateral reports consist of Treasury bills or Treasury-backed repurchase agreement transactions, stablecoin growth has led to a modest increase in demand for short-dated Treasury securities,” a committee member said.
Source: CoinMarketCap
The committee said that T-Bill tokenization “could lead to both operational improvements and innovation in the treasury market” but could pose risks to financial stability.
“Tokenization in the Treasury Market requires the development of a privately regulated and permissioned blockchain managed by a trusted government authority,” one member said.
Stablecoins – tokens pegged to the US dollar – have emerged as the primary infrastructure for commerce and payments.
According to CoinMarketCap, the total stablecoin market capitalization will reach its peak in 2024 and is now around $180 million.
Tether (USDT) dominates among statcoins with a capitalization of $120 billion.
Circle's USD Coin (USDC) is a distant second, with a market capitalization of nearly $35 billion according to CoinMarketCap.
Meanwhile, recognized real-world assets (RWAs) — from Treasury securities to works of art — represent a $30 trillion market opportunity globally, Colin Butler, Polygon's head of global institutional capital, told Cointelegraph in August.
Demand for products that evidence T-Bills and other highly liquid yielding assets is increasing.
Among the largest in assets under management (AUM) are BlackRock Dollar Institutional Digital Liquidity Fund (BUIDL) and Franklin Onchain US Government Fund (FOBXX), with AUM of approximately $530 million and $410 million, respectively.
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