San Francisco Fed study finds stablecoin Treasury growth offsets China’s retreat

The US government has a new kind of lender, and it doesn’t fly a flag.

A September 28, 2026 Economic Letter from the San Francisco Federal Reserve Bank found that stablecoin issuers have become a meaningful buyer of US Treasury securities. Their purchases have offset more than 40% of the decline in China’s Treasury holdings over the same stretch.

The numbers behind the shift

According to the San Francisco Fed’s research, stablecoin issuers increased their Treasury holdings by approximately $200 billion between 2021 and 2026. Most of that buying comes from the issuers behind the two largest stablecoins.

Those two tokens have seen their Treasury holdings grow more than tenfold in five years.

The buying has concentrated in short-term instruments. That makes sense given the business model: a stablecoin issuer needs to redeem tokens for dollars on demand. It wants assets it can turn into cash quickly.

Since 2023, stablecoin issuers have bought more short-term Treasury bills than Japan, the largest non-US holder of Treasuries.

If current trends hold, stablecoin issuer demand could rise to around $400 billion by the end of 2030. The researchers frame that as a projection that depends on today’s growth continuing, not a guarantee.

A changing cast of Treasury buyers

The foreign share of Treasury holdings dropped from over 50% in 2008 to roughly 30% in early 2026.

Much of that decline traces back to China reducing its holdings. For a long stretch, China was the archetypal foreign buyer, parking export earnings in long-term US debt as part of a strategic portfolio.

The San Francisco Fed casts stablecoin issuers as emerging private-sector buyers focused on liquid dollar assets. China played a long game with long-dated bonds. Stablecoin issuers prefer short-dated bills they can sell on short notice.

Regulation has helped cement the trend. The 2025 GENIUS Act set a federal framework requiring authorized domestic stablecoin issuers to back their tokens one-to-one with high-quality liquid assets, such as Treasury bills.

In practical terms, the law turned Treasury bill demand into a structural feature of the stablecoin business. Every new dollar of stablecoins issued under that framework needs a matching dollar of safe, liquid reserves sitting somewhere.

What this means for markets and crypto

The San Francisco Fed notes that stablecoin demand represents a new source of buying that could affect short-term yields. When a large, steady buyer shows up at the front end of the curve, it can influence pricing there.

The researchers stress that this demand remains relatively small compared with overall US fiscal financing needs.

There is also a concentration question worth watching. Because most of the buying flows from the issuers of just two tokens, the sector’s Treasury footprint depends heavily on a small number of firms. Any large wave of redemptions at those issuers could, in theory, mean sizable sales of short-term bills.

The metric to watch is whether stablecoin Treasury holdings keep tracking toward the roughly $400 billion projection for 2030. If they do, the San Francisco Fed’s letter may be remembered as an early snapshot of a structural change in who finances the US government.