Dollar stablecoins have grown to about $300 billion in circulation, and a Bank of England policymaker says that growth could extend the US dollar's reach abroad while adding new risks to the Treasury market during periods of heavy redemptions. Issuers already hold nearly $150 billion in Treasury bills, and large-scale selling during a run could pressure yields.
Dollar tokens hold a lasting head start
Carolyn Wilkins, an external member of the Bank of England's Financial Policy Committee, told an audience at Queen's University Belfast on Sep. 15. According to Wilkins: "considerable first-mover advantage" is how she described dollar stablecoins' position. About 98% of stablecoin value is denominated in dollars, according to figures she cited.
Stablecoins in circulation reached roughly $300 billion by mid-2026, up from less than $5 billion at the start of 2020. Most activity still involves crypto trading, lending, collateral, and market liquidity, but Wilkins said the tokens could move deeper into payments and international finance.
Cross-border settlement is one channel for that expansion. Stablecoin transfers can run around the clock without passing through every institution in a traditional correspondent banking network. Sending a $200 remittance cost an average of 6.4% worldwide in 2024, while the average charge in Sub-Saharan Africa reached about 8.5%, according to research Wilkins cited.
Issuer reserves feed Treasury demand
Issuers generally invest buyer funds in liquid reserve assets, including cash, short-term government debt, and Treasury-backed repurchase agreements. Growth in stablecoin supply can therefore send additional money into the market for US government securities.
Tether and Circle, issuers of USDT and USDC, held almost $150 billion in Treasury bills at the end of 2025, according to Bank for International Settlements research cited by Wilkins. Their net purchases reached about $33 billion during the year, and Wilkins described the two issuers as meaningful participants in short-term US government debt, even though their combined position remains small next to the full Treasury market.
Tether's earnings show the link: the company generated about $1.5 billion in operating profit during Q2 2026, supported by returns from its Treasury and repo holdings.
Redemptions could reverse the flow
The same reserve structure that channels money into Treasury bills during growth can create selling pressure during redemptions. Stablecoins are claims holders expect to exchange for cash at face value, and since tokens trade continuously, issuers may need to raise cash quickly, even outside normal market hours.
Wilkins warned that several large issuers selling Treasury bills at the same time could worsen swings in yields and liquidity if the government-debt market were already under strain. That pressure would not need to start inside the stablecoin industry — concerns about US inflation, public debt, or institutional credibility could weaken demand for dollar assets before redemptions add to the selling.
Wilkins said the stablecoin sector is not yet large enough to pose a major threat to the Treasury market or create a material financial-stability risk in the UK, though a large depegging event could still damage confidence in regulated tokens. She pointed to Circle's exposure when Silicon Valley Bank failed in March 2023, when Circle held about $3.3 billion at the lender and USDC briefly lost its dollar peg before US authorities guaranteed the bank's deposits.
Regulators are still writing the rules
The GENIUS Act, enacted in July 2025, requires US stablecoin issuers to hold at least one dollar of eligible reserves — cash, insured deposits, short-dated Treasury bills, repo agreements, or qualifying money market funds — for each dollar of tokens outstanding. Issuers worth more than $50 billion must undergo annual audits, and all regulated issuers must report weekly to their main regulator.
The Office of the Comptroller of the Currency expects to finalize its stablecoin rules by November 2026, which could push the effective date to around March 2027. Wilkins said reserve rules address whether issuers hold enough assets but do not answer how quickly those assets convert to cash during a run.
Source: crypto.news
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