According to the Treasury study, increasing usage of stablecoins would expand the market demand for bills. Stablecoins derive value from short-term government securities, such as Treasury bills and Treasury-backed repurchase agreements. The need for short-dated Treasury securities has increased dramatically because stablecoin issuers use these instruments to maintain the dollar value of their products.
The US government supports cryptocurrency and blockchain technologies because these systems develop financial systems that enhance the market value of US Treasury bills. Financial instruments receive most of their demand from Tether (USDT), Circle’s USDC, and other stablecoin issuers, who act as leading market forces. The proposed from the Treasury Department requires collateral from issuers to include Treasury bills, establishing a connection between stablecoin popularity and US government bond purchases.