Tether, Circle, Paxos Now Hold More U.S. Debt Than Some Nations

A quiet financial revolution is happening as stablecoin issuers now hold more US Treasury debt than some of the world’s biggest economies. According to new data, stablecoin treasury reserves from just four major issuers: Tether, Circle, First Digital, and Paxos; now total over $182 billion. That is more than South Korea and the United Arab Emirates and just below Norway.

This is big for crypto and global finance as governments around the world are tightening the screws on digital assets and fiat-backed tokens.

Stablecoin Issuers are now Major Bondholders

Based on the latest US Treasury disclosures and independent attestations, the combined short-term Treasury debt held by these stablecoin issuers reached $182.4 billion in April. This is more than the $133.8 billion held by the UAE and the $134.9 billion held by South Korea, putting stablecoin firms just behind Norway which holds $195.9 billion in US government securities.

Tether (USDT) is in the lead by a long shot. Its Q1 2025 attestation showed over $120 billion in Treasuries and CEO Paolo Ardoino told CNBC in May that the firm had already hit $125 billion in Treasury exposure. That includes a mix of short-dated Treasury bills, repos and money market funds.

Circle, the issuer of USDC, is next with $55.2 billion; $28.7 billion in Treasury bills and $26.5 billion in overnight repo agreements. These assets are held in the Circle Reserve Fund, managed by BlackRock and registered with the US SEC, which allows for same-day liquidation.

First Digital, the Hong Kong-based issuer of FDUSD, has $1.3 billion in Stablecoin Treasury exposure (78% of its $1.665 billion reserve pool) and Paxos, which manages PayPal USD (PYUSD), has nearly $880 million, mostly in reverse repos secured by Treasuries.

Why Stablecoins Love Treasuries

These issuers aren’t just buying Treasuries for bragging rights. There are structural reasons why US government debt is ideal for backing digital dollars. Treasuries offer T+0 settlement, daily liquidity and are now yielding over 5%; a holy trinity in modern finance.

According to Ardoino, this has allowed Tether to make over $1 billion in profit in the first quarter alone without using traditional banks. Stablecoin treasury reserves are almost entirely made up of these instruments because they’re the safest and most liquid assets available.

“Issuing stablecoins creates incremental demand for US debt without using the banking system,” Ardoino said, adding that Tether is now above Germany and Spain in total Treasury holdings.

Circle and Paxos have made similar points in their policy filings, saying that highly liquid, narrowly distributed collateral helps prevent systemic risk, especially during times of financial stress.

Regulatory Clampdown Could Reinforce Status Quo

The outsized role of Treasuries in stablecoin collateral isn’t an accident; it’s becoming a regulatory requirement.

In the U.S., the GENIUS Act, which passed the Senate in June, proposes to limit stablecoin reserves to cash and short-term U.S. government securities, effectively banning diversification into gold, real estate or corporate bonds. It’s now in the House.

Europe has gone even further. Under the MiCA framework, euro-pegged stablecoins must exclude commodities and corporate instruments, in line with the U.S.

Most stablecoin treasury holders welcome the clarity but warn of unintended consequences.

“Putting all our eggs in one basket makes us heavily dependent on the Fed’s liquidity regime,” one reserve manager said anonymously.

In other words, if the Fed tightens liquidity, stablecoin redemption and issuance capacity will shrink too.

Conclusion: From Crypto Tools to Bond Market Titans

Stablecoin issuers have become among the biggest U.S. bond holders on the planet. As the regulatory spotlight gets brighter and yields are so attractive, these crypto-native firms are anchoring their treasuries in instruments once reserved for nations and banks.

This is good for fiat-backed tokens but also introduces new systemic risks. As digital dollars grow, so will their influence on monetary policy, liquidity and market stability.

Summary

Stablecoin treasury reserves have hit $182 billion, with issuers like Tether, Circle, Paxos and First Digital ahead of countries like South Korea and the UAE in U.S. Treasury holdings. Tether has over $125 billion, Circle’s USDC has $55.2 billion. They use Treasuries for liquidity, safety and yield; now over 5%. New regulations like the GENIUS Act and MiCA will only entrench this trend, requiring Treasury-backed reserves.

FAQs

Which stablecoin issuer has the most U.S. Treasuries?

Tether (USDT) has over $125 billion, Circle (USDC) has $55.2 billion.

How do stablecoins invest in Treasuries?

They use Treasury bills, overnight repos and SEC-registered money market funds that offer T+0 settlement and daily liquidity.

Why is regulation focusing on stablecoin reserves?

Laws like the GENIUS Act and MiCA want to ensure stability by requiring reserves to be held in low-risk assets like cash and short-term Treasuries.

What are the risks of concentrated Treasury holdings?

While they are safe; relying too much on one asset class ties stablecoin liquidity to Fed policy which can become risky in volatile macro conditions.

Glossary

Stablecoin: cryptocurrency pegged to a fiat currency like the U.S. dollar, backed by collateral such as cash or Treasuries.

Treasury Bills: short-term U.S. government debt securities with maturities under one year.

Overnight Repo: short-term borrowing using Treasuries as collateral, repaid the next day.

GENIUS Act: US legislation aimed at regulating stablecoin reserve assets.

MiCA: European Union’s framework for regulating crypto-assets and stablecoins.

Sources

Tether 

First Digital USD (FDUSD)

Paxos PayPal USD (PYUSD)