Rise in Treasury Bill Demand Tied to Stablecoin Growth, Citi Highlights Dollar Influence

Citi: Stablecoins Drive Demand for U.S. Treasury Bills, Reflect Dollar’s Global Strength

Stablecoins are increasingly influencing demand for short-term U.S. Treasury securities, according to a new report from Citigroup.

The report highlights that as stablecoin adoption grows, issuers are allocating more reserves into Treasury bills. However, this shift may be partially balanced by funds moving out of traditional money market vehicles.

Pending U.S. legislation could reinforce this trend by requiring stablecoin issuers to hold reserves primarily in short-dated government debt, thereby intertwining stablecoins more deeply with the Treasury market.

Citi emphasizes that the dominance of dollar-backed stablecoins like USDT is a consequence of the U.S. dollar’s role as the world’s reserve currency—not the cause.

Additionally, the report notes the entrance of major financial players such as PayPal (PYPL) and Visa (V) into stablecoin initiatives, signaling broader mainstream adoption.

Citi projects the stablecoin market could reach between $1.6 trillion and $3.7 trillion by 2030, though regulatory constraints, including limits on yield generation, may cap growth.

The report concludes that stablecoins offer valuable insight into the evolving dynamics of the global monetary system, as digital currencies increasingly shape capital flows and payments worldwide.