Stablecoins are now a real buyer of short-term US debt. Here’s what that means for Treasury markets, and for you.
Stablecoins have quietly become a buyer of short-term US debt.
Here’s something most stablecoin holders never think about.
The digital dollar in your wallet is probably helping fund the US government.
Not in a conspiracy-theory way. In a plain, legal, slightly boring way. When you buy a reserve-backed stablecoin, the issuer takes your dollar and parks most of it in short-term US Treasury bills.
Do that across a market worth roughly $300 billion and you’ve got a buyer of US debt that barely existed six years ago.
So what does stablecoin growth mean for US debt markets? Stablecoins have become a steady, rules-driven source of demand for short-term Treasuries. Inflows can nudge T-bill yields lower, outflows can push them higher, and in most cases the holder funding all of it earns nothing.
That last part is the one I want to dig into.
Key takeaways
Reserve-backed stablecoins keep most of their reserves in cash, repos and Treasury bills, so their growth turns straight into demand for short-term US debt.Stablecoin issuers still hold less than 1% of all Treasuries outstanding. They move the front end of the curve, not the whole market.BIS research links a $3.5 billion stablecoin inflow to 3-month T-bill yields falling up to about 4 basis points within 10 days.Most stablecoin holders earn 0% while the reserve income stays with the issuer.USDS and sUSDS take a different path. Protocol revenue flows back to holders through the Sky Savings Rate, a variable rate set by Sky governance.
How Do Stablecoins Buy US Debt? The T-Bill Pipeline Nobody Sees
I can explain the pipeline in about ten seconds.
You swap $100 for 100 stablecoins.The issuer owes you $100 and holds $100 in reserves.Rules push those reserves into cash and very short-term government debt.
In the US, those rules come from the GENIUS Act, signed in July 2025. The OCC’s proposed rules list what counts as a reserve: cash, bank deposits, Treasury bills maturing in 93 days or less, certain repos, government money market funds, and tokenized versions of these.
The law kicks in by January 18, 2027 at the latest.
So every stablecoin minted under these rules is a fresh bid for T-bills. Every redemption is a sale.
Four steps take a stablecoin dollar into short-term Treasuries. Source: OCC proposed GENIUS Act rules.
Stablecoins and US Debt by the Numbers
Quick context. The US national debt crossed $40 trillion in August 2026. In the first nine months of fiscal 2026, net interest alone cost $827 billion. That’s more than the US spent on defense.
Washington needs buyers. Stablecoins have turned into one.
$24 billion to $270 billion. USD stablecoin supply growth from 2020 to June 2026, per a new paper by Nellie Liang and Brent Neiman.Nearly $35 billion. What stablecoins spent on T-bills in 2025, roughly matching the largest government money market funds, per the BIS.Less than 1%. The share of Treasuries outstanding held by stablecoin issuers, according to Treasury’s own borrowing advisory committee.$800 billion to $1 trillion. Extra T-bill demand Standard Chartered sees if the market hits $2 trillion by end-2028.
Treasury Secretary Scott Bessent has floated similar numbers. I’d treat them as scenarios, though. Growth has cooled this year alongside crypto trading volumes.
Stablecoins are a fast-growing buyer, but still a small slice of US debt. Sources: US Treasury, TBAC, Standard Chartered.
Do Stablecoins Actually Move Treasury Yields?
A little. And now we can actually measure it.
The BIS working paper Stablecoins and safe asset prices studied daily data from January 2021 to March 2026.
A $3.5 billion inflow lowered 3-month T-bill yields by 0.71 basis points on impact and up to 4 basis points within 10 days. Longer maturities barely moved.
An IMF working paper found the same direction. When stablecoin market cap jumps 1%, 1-month and 3-month yields fall. Small moves, but they’re real.
The part that gets less airtime is the exit. An earlier version of the BIS study found outflows pushed yields up two to three times as much as inflows pushed them down.
Money that arrives slowly can leave all at once. That asymmetry is the part of stablecoins and US debt that keeps regulators up at night.
There’s a fair counterpoint too. The Kansas City Fed points out that if people fund stablecoins out of bank deposits, banks may buy fewer Treasuries. So net new demand could be smaller than the headlines suggest.
How a $3.5B stablecoin inflow moves 3-month T-bill yields. Source: BIS Working Paper 1270.
The Catch: Stablecoin Holders Fund the Debt, Issuers Keep the Yield
T-bills pay yield. Somebody collects it.
With most reserve-backed stablecoins, that somebody is the issuer. The GENIUS Act bars payment stablecoin issuers from paying you yield, so the reserve income stays on their side of the table.
Put simply: you supply the dollar. The issuer buys the T-bill. The issuer keeps the yield.
And a lot of those dollars just sit there. By Sky’s estimate, roughly 80% of stablecoins aren’t deployed into any source of yield. That’s money quietly funding Treasuries without earning its holder a cent.
Which is why “who keeps the yield?” matters as much as “who buys the debt?”
USDS, sUSDS and the Sky Savings Rate: Where the Yield Goes Instead
Sky.money gives you non-custodial access to Sky Protocol, which handles the same dollar differently.
USDS is Sky Protocol’s fully backed stablecoin, and it’s overcollateralized. On October 23, 2026, Sky.money showed $16.24 billion in collateral behind 10.02 billion USDS, about $1.62 for every dollar. You can check the mix yourself on the Sky financial dashboard. Here’s what backs a stablecoin if you want the full checklist.
Where does the revenue come from? Sky Agents tap USDS liquidity and put it to work across collateralized loans, US Treasury bills and lending markets. What they earn flows back into Sky Protocol.
For you, it works like this:
Supply USDS and receive sUSDS.sUSDS accrues the Sky Savings Rate (SSR) automatically.Exit to USDS anytime. No lockups, and no fees through Sky.money.
The SSR is a variable protocol rate funded from aggregate Sky protocol surplus. SKY holders raise or lower it through public onchain votes.
One honest detail: sUSDS isn’t exposure to any specific Agent, strategy or T-bill. You get the rate, not a slice of one position.
The numbers are public. In Q2 2026, Sky Protocol recorded $107.35 million in Gross Protocol Revenue, and $53.91 million went to sUSDS holders through the SSR.
sUSDS supply closed the quarter at $5.52 billion, up 149% year over year. It’s the world’s largest yield-generating stablecoin.
Track record: the core protocol has run since 2017 without an exploit, from a team that’s spent close to a decade on stablecoin infrastructure.Rated: in 2025, S&P Global gave Sky Protocol the first credit rating ever assigned to a DeFi protocol.Risk discipline: Sky Frontier Foundation’s risk frameworks, among the most systematic in the space, tie each Agent’s access to capital to its performance.Built for steadiness: the SSR is engineered for strong risk-adjusted yield, not the biggest number on a leaderboard.
Risks still apply. Smart contracts can fail, and the rate can change. Need USDS first? You can convert 1:1 through the Peg Stability Module.
USDS backing and where the yield goes. Sources: Sky.money live data, SFF Q2 2026 Quarterly Report.
Lifeline or Liability? What Stablecoin Growth Means for US Debt Markets
Honestly? It depends who you ask.
The case for:
A steady buyer at the short end can make government borrowing a bit cheaper.Dollar stablecoins spread dollar use abroad, and much of that demand lands in T-bills.
The case against:
Money leaving bank deposits for stablecoins could mean less bank lending.A fast wave of redemptions could force T-bill sales right when markets are stressed.Leaning harder on short-term bills raises refinancing risk when rates jump.
Both sides can be right at once. That’s why what makes a stablecoin reliable matters more as this market grows: backing, liquidity, exits and transparency.
Stablecoins won’t fix a $40 trillion debt. They’re becoming part of how it gets financed, though.
Sky’s also working on ways to make capital movement data speak the same language in real time, whatever the vehicle or currency.
Two views on what stablecoin growth means for US debt markets.
Quick Answers on Stablecoins and US Debt
Q. Do stablecoins hold US debt?
A. Yes. Reserve-backed stablecoins keep most reserves in short-term Treasury bills, repos and cash, making issuers a growing buyer of US debt.
Q. Does sUSDS pay T-bill yield?
A. No. sUSDS accrues the Sky Savings Rate, a variable rate funded from aggregate Sky protocol surplus. Treasury bills are one of several strategies feeding that revenue.
Could stablecoins hurt the Treasury market?
In a big run, possibly. Outflows move T-bill yields more than inflows do. That’s why reserves you can verify matter.
. . .
Over to you. Should stablecoin holders get a share of the yield their dollars generate, or is 0% a fair price for a stable dollar? Tell me in the comments. I read every one.
If you’d rather your stablecoins didn’t sit still, put them to work with sUSDS.
Stablecoins and US Debt: Who Keeps the T-Bill Yield? was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.