Stablecoins boosting demand for US T-bills: Treasury Dept
2024-10-31

Stablecoins seem to be increasing demand for short-term United States government bonds known as Treasury bills, according to US Department of the Treasury meeting minutes published Oct. 30. 
In an Oct. 29 meeting, the US Treasury’s Borrowing Advisory Committee weighed 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 US government officials indicating a nascent openness to meaningfully integrating blockchain technologies into the US financial system.
“[B]ecause most stablecoin collateral reportedly consists of either Treasury bills or Treasury-backed repurchase agreement transactions, the growth in stablecoins has likely resulted in a modest increase in demand for short-dated Treasury securities,” one Committee member said, according to the minutes.
The committee said T-bill tokenization “could lead both to operational improvements and to innovation in the Treasury market” but could also pose risks to financial stability.
One member suggested that “tokenization in the Treasury market would likely require the development of a privately controlled and permissioned blockchain managed by a trusted government authority.”
Stablecoins — tokens pegged to the US dollar — are emerging as the core infrastructure for trading and payments.
Total stablecoin market capitalization hit record highs in 2024 and now approaches $180 million, according to CoinMarketCap.
Tether USDTUSD dominates among stablecoins with a market capitalization of $120 billion. 
Circle’s USD Coin USDCUSD is a distant second, with a market capitalization of approximately $35 billion, according to CoinMarketCap.
Meanwhile, tokenized real-world assets (RWAs) — from Treasury securities to artworks — represent a $30-trillion market opportunity globally, Colin Butler, Polygon’s global head of institutional capital, told Cointelegraph in August.
Demand is surging for products that tokenize T-bills and other highly liquid yield-bearing assets. 
Among the largest in terms of assets under management (AUM) are BlackRock USD Institutional Digital Liquidity Fund (BUIDL) and Franklin OnChain US Government Money Fund (FOBXX), with AUM of approximately $530 million and $410 million, respectively.