A recent development in the financial landscape has captured attention as the US Treasuries market undergoes significant shifts. Reports indicate that Tether, the largest stablecoin issuer globally, made an impressive net purchase of $28.2 billion in US government bonds in 2025. This figure places Tether as the seventh-largest offshore buyer of US Treasuries, surpassing investments made by notable countries such as China. The combined gross Treasuries holdings of Tether and its competitor Circle, which ranks as the second largest stablecoin issuer, now eclipse those of certain countries, including South Korea and Saudi Arabia.
The rapid ascension of stablecoins—a type of digital currency pegged to a stable asset or currency—into substantial players in the financial arena is striking, especially considering their relative insignificance just five years ago. US Treasury Secretary Scott Bessent views this trend positively, suggesting that stablecoins could enhance the global use of the US dollar and help manage the nation’s growing debt. He envisions the sector’s expansion from its current $300 billion valuation up to $3 trillion, despite the turbulence seen in other areas of cryptocurrency.
However, this promising trajectory is met with resistance from various global leaders who are wary of increased dollar dominance. Notably, this skepticism is emerging even within the United States, as major banks express concerns. At a recent White House meeting aimed at discussing new stablecoin regulations, tensions flared, illustrated by JPMorgan’s Jamie Dimon reportedly dismissing Coinbase CEO Brian Armstrong’s views as “full of shit.”
Investors are advised to closely monitor this conflict, which holds implications not just for the Treasury market but also for the broader financial ecosystem. The crux of the discussion lies in whether stablecoins will pose a competitive threat to traditional bank deposits. Despite the lingering perception of stablecoins as a hedge against onshore financial institutions, the crypto sector argues that fears of significant deposit loss are exaggerated. They assert that a substantial portion of American lending is already sourced from private credit markets, not banks. Moreover, they caution that stifling stablecoin growth could disadvantage the US in the global financial arena, especially as countries like China allow financial entities to offer interest on digital currencies.
The stakes in this financial debate extend into political territory, revealing fissures within the Trump administration. The former president’s initial support for the cryptocurrency sector was reflective of backing from tech oligarchs and donors who favored digital innovation. Yet, established Wall Street banks, also key contributors to Republican campaigns, advocate for traditional banking interests, leading to a clash among various factions of Trump supporters. This internal struggle echoes previous ideological rifts within the administration, indicating that the stablecoin issue transcends mere financial analysis and taps into deeper geopolitical dynamics.
As discussions unfold regarding the proposed Clarity bill, which aims to regulate the stablecoin sector, the implications are manifold. The resolution—or lack thereof—of this conflict will not only shape the future of digital currencies and their relationship with traditional banking but may also serve as a touchstone for the evolving political landscape surrounding the Trump administration’s financial policies. Stakeholders will be keenly observing the outcomes, especially during upcoming US Treasury bond auctions, keeping in mind the complex interplay of finance and politics that is being accentuated by the rising prominence of stablecoins.
