Citi: Stablecoin Growth Fueling Treasury Demand, Reinforcing Dollar’s Reserve Role
The expanding use of stablecoins is driving increased demand for short-term U.S. Treasury securities, according to a new report from Citigroup released Friday. The analysis underscores how stablecoins are playing a pivotal role at the intersection of crypto markets and traditional finance.
As stablecoin adoption accelerates, issuers are turning to U.S. Treasury bills for reserve backing. However, Citi noted that the overall impact on Treasury markets may be tempered by shifts in allocation away from traditional money market funds.
Legislative developments in the U.S. could solidify this trend. Pending bills in Congress may mandate that stablecoin reserves be held primarily in short-duration government debt, further tightening the relationship between digital dollar proxies and public finance.
Citi emphasized that the U.S. dollar’s dominance in the stablecoin ecosystem stems from its longstanding role as the world’s reserve currency—not the other way around. Dollar-pegged tokens like USDT continue to dominate due to their integral role in crypto trading and payment infrastructure.
The report also highlighted the growing involvement of major financial players such as PayPal (PYPL) and Visa (V), both of which are exploring stablecoin-powered solutions in payments and settlement systems.
Citi estimates that the stablecoin market could balloon to $1.6 trillion to $3.7 trillion by 2030. Still, regulatory hurdles—such as potential limits on yield—may constrain expansion.
Even so, Citi said that tracking stablecoin issuance patterns may offer valuable insight into the shifting contours of the global monetary system in the years ahead.
