Citigroup: “Stablecoin Growth Drives Increased Demand for Short-Term US Treasuries”
Summary
- Citigroup stated that increased stablecoin usage is driving greater demand for short-term US Treasuries.
- A regulatory bill on stablecoins may affect market trends if it mandates that reserves be included in short-term US Treasuries.
- The report forecasts that the stablecoin market could grow to between $1.6 trillion and $3.7 trillion by 2030.
The spread of stablecoins is driving an increase in demand for short-term US Treasuries, according to analysis. It is also observed that stablecoins help reinforce the dominance of the US dollar.
On the 30th (local time), according to cryptocurrency-focused media outlet CoinDesk, Citigroup stated in a research report that “As the use of stablecoins increases, demand for short-term US Treasuries, which are managed as reserves, is also rising.” However, some of this demand is a replacement from existing Money Market Funds (MMFs), so the net increase may be more limited than expected, the report added.
The report also projected that the ‘Genius Law,’ a stablecoin regulatory bill currently under discussion in the US Congress, could institutionally support this trend. The bill contains requirements that stablecoin issuers must include reserves in safe assets such as short-term US Treasuries.
The report stated, “Dollar-based stablecoins such as Tether (USDT) play a central role in crypto trading and on-chain payments. Traditional payment companies such as PayPal and Visa are also attempting to introduce their own stablecoins, and the related market is expanding.”
The report forecasted that the stablecoin market could grow to between $1.6 trillion and $3.7 trillion by 2030.
Minseung Kang
minriver@bloomingbit.ioBlockchain journalist | Writer of Trade Now & Altcoin Now, must-read content for investors.
