Money market funds have long bought short-term US government debt. Stablecoin issuers are now doing the same. Both need safe, liquid assets.
Both are buying Treasury bills in size. The question is whether this private-sector demand can hold — and what happens if it falters.
The math is straightforward. Foreign official holders — central banks and sovereign wealth funds — once held roughly half of all outstanding US Treasury debt. By 2023, that share had dropped below 30%.
That is a massive hole. If private buyers do not fill it, the Treasury market could face higher yields to attract reluctant investors.
That would ripple through everything from mortgage rates to corporate borrowing costs. United Overseas Bank, one of Singapore’s largest banks, argues the private sector is already stepping in. The bank points to two groups: money market funds and stablecoin issuers.
Both need mountains of short-duration, high-quality collateral. Both have been buying Treasury bills in size. Stablecoin issuers are the newer factor.
They must hold high-quality collateral against every token in circulation. Treasury bills fit that requirement perfectly.
Tokenized Treasury products add another layer — a digital wrapper around government debt that can trade more efficiently than the underlying bonds. UOB sees this as a new and potentially durable source of demand. But durability is not guaranteed.
Stablecoin issuers operate in a regulatory gray zone. The US has no federal framework for stablecoins.
The European Union’s Markets in Crypto-Assets regulation, or MiCA, imposes strict reserve and transparency rules. The UK is consulting on its own regime. If regulators crack down, or if a major stablecoin suffers a run, that demand could evaporate fast.
Money market funds are more established, but they are not immune to stress. In March 2020, as COVID-19 panic gripped markets, prime money market funds faced heavy outflows. The Federal Reserve had to step in with emergency lending facilities.
If another crisis hits, fund managers may dump Treasurys, not buy them. The risk is concentration.
Two private-sector groups are replacing what was once a broad base of foreign official buyers. If both groups pull back at the same time, the Treasury market could face a sudden demand shock. Yields would spike.
The Fed would likely have to intervene again. What is being done to prevent that?
Not much, publicly. UOB is making a case, not a policy proposal. Regulators are watching stablecoins but have not acted decisively.
The Treasury market itself has undergone structural reforms since the 2014 flash rally and the 2020 dysfunction. The Fed now has a standing repo facility. Clearing mandates are being tightened.
But none of those measures directly address the shift in buyer composition. Tokenized Treasury products could help.
They allow faster settlement and broader access. But they also introduce new dependencies — on blockchain infrastructure, on smart contract code, on custodians. A bug in a popular tokenized Treasury product could freeze billions in collateral.
The quiet shift UOB describes is real. Foreign official holdings have fallen from roughly half of outstanding Treasurys to under 30%.
Private demand has filled some of that gap. Whether it can do so reliably, through stress and regulation and market evolution, is an open question. The answer will matter for everything from global borrowing costs to the stability of the world’s most important bond market.
{“@context”: “https://schema.org”, “@type”: “NewsArticle”, “headline”: “Stablecoin issuers join money market funds in buying US Treasury bills”, “description”: “Money market funds have long bought short-term US government debt. Stablecoin issuers are now doing the same. Both need safe, liquid assets. Both are buying…”, “datePublished”: “2026-06-29T13:12:00+00:00T09:30:00+00:00”, “author”: {“@type”: “Person”, “name”: “Henry Thomas”}, “publisher”: {“@type”: “Organization”, “name”: “InfoPulse Today”, “url”: “https://newsfeed.infopulsetoday.com/”}}
