Stablecoin Reserves Concentrated in Treasury Bills Under 93 Days

Stablecoin reserves are increasing demand for U.S. Treasury securities, but the effect is concentrated in short-term instruments. The structure of accumulating reserves focuses on Treasury bills with a remaining maturity of 93 days or less and cash-like assets, meaning it does not directly alleviate the burden of financing long-term bonds such as 10-year and 30-year securities.

The U.S. Treasury Borrowing Advisory Committee (TBAC) has stated that under the GENIUS Act framework, payment stablecoins must maintain a 1:1 reserve with cash, deposits, repos, and Treasury bills with a remaining maturity of 93 days or less. The committee assessed that while the increase in stablecoin issuance could create demand for short-term Treasury securities, it is difficult to view the funds as purely new demand if they are moving from deposits or money market funds.

The GENIUS Act is a law that places dollar-pegged payment stablecoins under the regulatory framework for reserve assets. The Office of the Comptroller of the Currency (OCC) issued a proposed rule on February 25, outlining provisions for reserve assets, redemption, risk management, auditing, and supervision. The law's effective date is proposed to be 18 months after July 18, 2025, or 120 days after the final rule, whichever comes first, and it is currently in the pre-final rule stage.

The key factor is maturity. If the reserve asset rules are tailored to short-term assets, the growth of stablecoins will be linked to the front end of the Treasury market, specifically the demand for Treasury bills (T-bills). Conversely, it is difficult to interpret this as a channel for directly purchasing long-term bonds like 10-year and 30-year securities.

Short-term Treasury securities have short maturities and high liquidity, making them function like cash-like assets. Stablecoin issuers must prepare for customer redemptions, so they prefer assets with shorter maturities and easier liquidity than long-term bonds, which have greater price volatility. Therefore, the connection between stablecoins and short-term Treasury demand also serves as an indicator for domestic investors to gauge dollar liquidity.

The Bank for International Settlements (BIS) reported in a study analyzing data from January 2021 to March 2026 that an influx of $3.5 billion (approximately 4.823 trillion won) in stablecoins immediately lowered the yield on 3-month Treasury bills by 0.71 basis points. It was analyzed that within 10 days, this could lower yields by about 4 basis points, and by the 13th day, approximately 5 basis points. However, the effect was concentrated on short-term Treasury securities, with limited transmission to longer maturities.

This indicates that the important factor is not simply the equation of 'stablecoins = demand for U.S. Treasuries,' but rather 'which maturity of Treasury securities is being purchased.' As stablecoins grow, they may influence the supply and demand in the short-term market, but long-term interest rates and liquidity for long-term bonds are subject to separate market pressures.

The U.S. Treasury's response to long-term bonds also operates through separate mechanisms. On August 19, the Treasury announced it would increase the liquidity support buyback size for nominal coupon bonds with maturities of 10-20 years and 20-30 years from $2 billion (approximately 27.56 trillion won) to at least $4 billion (approximately 55.12 trillion won) per operation. The application period is from September 9 to November 4.

Buybacks are operations where the Treasury repurchases already issued Treasury securities to bolster trading liquidity. This measure focuses on improving the trading conditions for older long-term coupon bonds. The structure of stablecoin reserves creating demand for short-term securities differs from the policy objectives and operational pathways.

Refinancing burdens also remain. On August 5, the Treasury announced in its quarterly refinancing statement that it would issue $125 billion (approximately 172.25 trillion won) in Treasury securities to refinance approximately $96.3 billion (approximately 132.70 trillion won) in privately held Treasury securities maturing on August 15. In this process, it will raise approximately $28.7 billion (approximately 39.55 trillion won) in new cash.

The issuance categories included $58 billion (approximately 79.92 trillion won) in 3-year securities, $42 billion (approximately 57.88 trillion won) in 10-year securities, and $25 billion (approximately 34.45 trillion won) in 30-year securities. Separately from short-term funding demand, the Treasury must continue to confirm market absorption in the medium to long-term maturity range.

Circle's USD Coin (USDC) reserves also reflect the same trend. As of August 27, Circle disclosed that USDC is backed by Treasury bills with maturities of less than 3 months, overnight reverse repos, and cash-like deposits. On the same day, the circulating supply of USDC was $73.7 billion (approximately 101.56 trillion won).

In the accounting audit report dated July 31, the circulating amount of USDC was presented as $71.826 billion, with the fair value of reserve assets at $71.941 billion. The reserve assets included $7.179 billion in U.S. Treasuries, $52.723 billion in U.S. Treasury repurchase agreements, and $10.674 billion in separate account cash.

The expectations of policymakers and the analyses of research institutions differ. The Treasury Borrowing Advisory Committee believes that stablecoins can bolster demand for short-term securities, but BIS research indicates that the effects primarily remain at the front end, such as with 3-month securities. While there are expectations for expanded Treasury demand from a policy perspective, the actual transmission range is assessed to be narrow.

Long-term interest rates remain a separate burden. According to the U.S. Treasury's daily yield table, as of August 28, the yield on 10-year securities was 4.73%, 20-year securities were 5.21%, and 30-year securities were 5.22%. While stablecoins can bolster demand for short-term Treasuries, long-term bond yields and liquidity for long-term securities must be viewed separately in relation to Treasury buybacks, refinancing issuances, and the market interest rate environment.

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