Increasing Demand for Treasury Bills Driven by Stablecoins

The US Department of the Treasury meeting minutes published on Oct. 30 revealed that stablecoins are driving demand for short-term United States government bonds, known as Treasury bills. During an Oct. 29 meeting, the US Treasury’s Borrowing Advisory Committee discussed the advantages of stablecoin adoption and Treasury bill tokenization. One committee member even proposed the creation of a permissioned blockchain specifically for T-bills. This signals a growing openness among US government officials to incorporate blockchain technology into the financial system. The committee acknowledged that stablecoin collateral mainly consists of Treasury bills or Treasury-backed transactions, leading to increased demand for short-dated Treasury securities. T-bill tokenization was seen as a way to enhance operational efficiency and foster innovation in the Treasury market, although it also poses risks to financial stability. The rise of stablecoins, particularly Tether and USD Coin, has made them essential for trading and payments, with a total market capitalization nearing $180 billion.