Tether adds U.S. Treasuries as GENIUS Act debate builds

Tether is seventh‑largest foreign buyer of U.S. Treasuries in 2025

Tether became the seventh‑largest foreign buyer of U.S. Treasury securities in 2025, with net purchases of about $28.2 billion, according to the Financial Times. The ascent reflects how dollar‑backed stablecoins now channel large reserves into short‑duration government debt.

USDT maintains its peg with reserves largely invested in cash and Treasury bills, which are short‑term U.S. government IOUs. That structure has turned stablecoin issuance into a new demand source for T‑bills.

Why it matters for yields, liquidity, and U.S. Treasury policy

An academic study on arXiv found Tether held roughly 1.6% of outstanding Treasury bills in Q1 2025, with this share associated with lower short‑term yields. The authors argue stablecoin demand is now material in bill markets, though effects remain nuanced.

The Bank for International Settlements has warned that stablecoins underperform on money’s core attributes under stress, and may pose risks to monetary sovereignty and financial integrity. Those concerns shape how regulators weigh reliance on stablecoin demand for public debt.

Transparency also matters for market confidence. According to Tether’s published reserve attestations, the firm reports regular audits of its backing, with frequency moving to monthly in late 2025.

Bill‑market demand from large stablecoin issuers can marginally compress front‑end yields and smooth auctions, especially during risk‑off episodes. Conversely, redemptions could remove liquidity, so policy design aims to reduce procyclical swings.

At the time of this writing, Coinbase Global (COIN) was trading near $161.04, up about 10.21% intraday, based on data from Yahoo Finance. The move offers context on broader digital‑asset sentiment alongside Treasury‑market developments.

Regulatory landscape and political split over stablecoins

U.S. Treasury, GENIUS Act, and access for foreign issuers

The U.S. Department of the Treasury has framed 2025’s genius act as providing prudential standards for payment stablecoins, including high‑quality, short‑duration government securities as backing and clear oversight for issuers. It also outlines pathways for compliant foreign issuers to serve U.S. users under recognized safeguards.

Before detailing implementation, Treasury emphasized the dollar’s strategic role in this market. “Regulated stablecoins can bolster the U.S. dollar’s global reserve status,” said Scott Bessent, Treasury Secretary.

Industry participants are converging on stronger licensing and consumer‑protection rules. Jeremy Allaire of Circle has argued issuers that serve U.S. users should register domestically to ensure uniform standards, as reported by The Block.

Traditional banks versus crypto advocates inside Trump’s coalition

A policy rift has emerged between crypto‑aligned investors and traditional banking interests, according to CoinDesk. Tech and digital‑asset advocates back accommodative rules for stablecoins, while bank‑aligned voices worry about deposit flight, contagion risk, and regulatory carve‑outs.

FAQ about Tether U.S. Treasuries

Does Tether’s demand for Treasury bills lower short‑term yields or affect market liquidity?

Evidence links stablecoin buying to slightly lower bill yields and added demand; overall liquidity effects appear modest so far and depend on redemption dynamics.

What is the GENIUS Act and how would it regulate stablecoins like USDT and USDC?

A 2025 U.S. law setting standards: high‑quality reserves, short‑duration Treasuries backing, issuer registration and oversight, plus defined pathways for compliant foreign issuers to reach U.S. users.