The GENIUS Act has linked stablecoin growth directly to demand for U.S. government debt. Under the law, stablecoin tokens must be backed one-for-one by assets such as U.S. dollars, Treasury bills, or similar short-term instruments, which means compliant issuers need to keep allocating capital into short-dated government paper.
Reserve requirements are turning token issuance into Treasury purchases
Tether currently reports $141 billion in U.S. Treasury exposure. Of that total, $122 billion is held directly in T-bills, while the rest sits in overnight reverse repurchase agreements. That places Tether as the world’s 17th-largest holder of U.S. government debt. Circle’s USDC adds another $24.5 billion, with roughly 93% of its reserves kept in short-term government assets and repos.
Tether, founded in 2014, is the largest stablecoin issuer globally and is best known for USDT, its dollar-pegged token. Circle, founded in 2013, issues USDC and has built a sizable position in global digital payments infrastructure. Both companies started as crypto market operators. Now they are also notable participants in the market for U.S. short-term debt. The mechanism is simple: every additional USDT or USDC in circulation requires more reserve assets behind it.
Stablecoins are filling part of the gap left by foreign holders
Large overseas buyers of U.S. Treasuries have been cutting exposure in recent years. China sold $86 billion in Treasuries over the past 12 months, bringing its holdings to the lowest level since 2008. Japan, still the largest foreign holder, owns about $1.2 trillion and has also signaled a reduction strategy.
That shift has opened room for new sources of demand. Stablecoins are increasingly part of that picture. Because reserve rules are embedded in law, growth in supply can translate into recurring purchases of U.S. government debt. At the same time, dollar-denominated stablecoins extend the distribution of the U.S. dollar through digital rails across global markets.
Apollo sees a $2 trillion sector by 2028
Financial services firm Apollo projects the stablecoin sector could reach $2 trillion by 2028. If that path holds, stablecoin issuers would own more U.S. Treasuries than Japan does today, which would alter the ranking of the world’s largest holders of American government debt.
Tether also said it generated $10 billion in profit during the first three quarters of 2025, more than Bank of America over the same period and close to Goldman Sachs and Morgan Stanley, while reporting a headcount of about 300 employees. Commentary cited in the source argues that the GENIUS Act has effectively created a new class of steady Treasury buyers. In that view, Tether and Circle together now hold more U.S. Treasuries than South Korea, Germany, and Saudi Arabia combined.
As stablecoin adoption expands, each newly minted token adds to demand for U.S. sovereign debt. The connection is no longer only a market outcome. It is now built into federal law and reserve structure.