Is America exporting stablecoins to import Treasury demand?

The U.S. government is considering an overseas stablecoin push to boost demand for its Treasury bonds. 

According to a Bloomberg report, the U.S. was exploring a public-private partnership to drive the use of USD-backed stablecoins abroad. And the primary end goal? To preserve the U.S. dollar’s status as the world’s reserve currency, which directly increases global demand for U.S. Treasury bonds. 

Unfortunately, the U.S. Treasury bond crisis could worsen, and other global powers are already positioning to fight against USD-backed stablecoin dominance. 

Could stablecoins bring new Treasury buyers?

Stablecoins are on-chain, digital versions of traditional currencies fully backed by those currencies, e.g., USD or Euros. Ideally, every stablecoin in circulation, such as Circle’s USDC or Tether’s USDT, has a corresponding reserve backing it. 

Under the U.S. GENIUS Act, the reserves should be 100% in Treasury bonds or cash equivalents. Currently, USD-backed USDT and USDC lead the stablecoin market with 90% market share.

As of early 2026, they held over $220B in Treasury bonds as part of their stablecoin reserves. Tether alone held over $140B and was the 17th-largest holder of U.S. Treasury bonds.

The stablecoin share is small compared to the $6.4 trillion U.S. Treasury bond market. However, the current bond market crisis and projected stablecoin adoption are also key factors. 

The bond yields are rising towards record 6% levels as U.S. fiscal debt crosses $40 trillion.

At the same time, foreign demand for short-term bonds has declined amid a de-dollarization trend. And Treasury intervention plans will worsen the debasement and market rout, according to analyst James Lavish. 

The problem is, the higher yields go, the more bonds the Treasury will need to sell. If they step in to buy the bonds themselves, this creates further debasement

That’s where the planned stablecoin push comes in. 

A Treasury advisory committee discussed estimates placing stablecoin supply near $2 trillion by 2028. That was a growth scenario, not a settled forecast.

EU, China oppose USD stablecoins

First, banks are pushing back against stablecoin yields. According to JPMorgan analysts, it will make the products less appealing and limit the growth outlook to about $500B, not the initial $2T milestone. 

Secondly, other global powers are already alarmed by U.S. plans. The EU, in particular, wants to advance its Digital Euro and block infiltration of USD-backed stablecoins. China, on the other hand, is aggressively pushing for the Digital Yuan, e-CNY, complete with a yield option. 

Overall, the U.S. plan to leverage USD-backed stablecoin dominance to salvage its fiscal debt crisis will likely face more opposition. 

Final Summary

• The U.S. was considering joint ventures to promote dollar stablecoins abroad and support Treasury demand.
• EU and China are already pushing against USD stablecoin dominance.