{"id":12740,"date":"2026-09-03T02:42:14","date_gmt":"2026-09-03T02:42:14","guid":{"rendered":"https:\/\/cryptonews.uk.com\/?p=12740"},"modified":"2026-09-03T02:42:14","modified_gmt":"2026-09-03T02:42:14","slug":"how-stablecoins-are-quietly-becoming-the-feds-debt-buyer-of-last-resort","status":"publish","type":"post","link":"https:\/\/cryptonews.uk.com\/?p=12740","title":{"rendered":"How stablecoins are quietly becoming the Fed\u2019s debt buyer of last resort"},"content":{"rendered":"
<\/p>\n
\n
Circle president Heath Tarbert told Congress on Sept. 2 that placing digital-dollar infrastructure under US rules could reinforce the network effects that support the currency\u2019s global role. The testimony framed stablecoin and digital asset legislation as a tool of dollar statecraft.<\/p>\n
US rules can strengthen private dollar-token rails, while official reserve share remains a separate contest. Regulated stablecoins can spread private use of dollar-denominated tokens, change how issuers hold reserves, and add demand for short-term Treasuries.<\/p>\n
Central banks remain responsible for deciding which currencies they hold. Tarbert acknowledged the boundary, arguing that payment technology cannot substitute for sound economic policy and that digital infrastructure cannot preserve dollar primacy on its own.<\/p>\n
The dollar accounted for 57.13% of allocated global foreign exchange reserves in the first quarter of 2026, up from 56.42% in the fourth quarter of 2025, according to the International Monetary Fund\u2019s latest COFER brief. Exchange-rate valuation effects accounted for around half of that quarterly increase.<\/p>\n
The latest move was an increase, even against a longer-term decline in the dollar\u2019s official reserve share. The valuation adjustment also prevents crediting the change to stablecoin adoption. A central bank\u2019s reported reserve mix can shift when exchange rates move, even without an equivalent portfolio decision.<\/p>\n
COFER tracks reserve assets reported by monetary authorities, and stablecoin market capitalization measures liabilities issued by private companies to token holders.<\/p>\n
The Bank for International Settlements estimated that roughly 98% of stablecoin value is denominated in dollars. That shows the dollar\u2019s dominance in private token markets.<\/p>\n
BIS researchers nevertheless expect the near-term effects to appear mainly in private stores of value and means of payment, rather than in the official reserve, intervention or anchor-currency functions of central banks.<\/p>\n
Stablecoins can consequently expand the dollar\u2019s digital reach while fiscal credibility, institutions, market depth, and valuation forces continue to shape official reserve demand. This distinction separates consumers and businesses choosing a digital payment instrument from monetary authorities choosing a reserve portfolio.<\/p>\n
What regulated stablecoins can change<\/h2>\n
The GENIUS Act issuer framework requires one-to-one permitted reserves, redemption at par, disclosures, supervision, and financial-crime compliance.<\/p>\n
Those rules can improve reserve quality, influence where issuers locate, shape whether unlicensed issuers can offer stablecoins in the US, and steer more issuer assets toward short-term safe instruments.<\/p>\n
GENIUS was enacted in July 2025, but its main requirements were not yet generally effective on the date of Tarbert\u2019s testimony. Treasury\u2019s August rulemaking notice said the general effective date was expected to be Jan. 18, 2027, unless final implementing rules made the law effective 120 days after their issuance.<\/p>\n
A broader restriction on offering payment stablecoins from unlicensed issuers is scheduled to begin July 18, 2028.<\/p>\n
Once it takes effect, the framework can govern backing, redemption, and supervision, leaving central bank currency allocations outside.<\/p>\n
CLARITY addresses the trading and intermediary layer above stablecoins. The House passed the measure, the Senate Banking Committee advanced its portion 15-9, and the updated merged Senate text was released July 22.<\/p>\n
The proposal\u2019s principal function is to allocate jurisdiction between the Securities and Exchange Commission and the Commodity Futures Trading Commission and set rules for digital-asset intermediaries and markets.<\/p>\n
If enacted, those rules could make US digital asset markets easier to operate in and extend the reach of regulated dollar tokens. Its effect would run through market structure rather than official reserve allocation.<\/p>\n
Stablecoin issuers need liquid assets to support redemptions, and Treasury bills can satisfy that need. A Treasury Borrowing Advisory Committee analysis, using major-issuer data through September 2025, found that bills represented 53% of Tether and Circle assets. Their bill holdings had increased by $70 billion since 2022.<\/p>\n