Stablecoin growth could boost dollar dominance, US Treasury demand: BoE official
Reported by Cointelegraph · AI-assisted summary by ChikoCorp AI News Desk
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Summary
Carolyn Wilkins, a member of the Bank of England’s Financial Policy Committee, stated that the growth of stablecoins could reinforce the global dominance of the US dollar and increase demand for US Treasurys. She highlighted that dollar-denominated stablecoins facilitate cross-border settlements and expand access to dollar-linked assets, which could have significant implications beyond the crypto market. Wilkins noted that major stablecoin issuers like Tether and Circle hold large amounts of US government debt.
Why it matters
Wilkins suggests that the rise of stablecoins could strengthen the US dollar's role in global finance by making dollar assets more accessible internationally and increasing demand for US Treasurys. This dynamic could affect the stability and liquidity of US government debt markets, especially if large stablecoin redemptions require issuers to sell Treasurys, potentially causing market volatility.
Key context
Stablecoin adoption has grown to over $300 billion in circulation, with 98% of stablecoin value tied to the US dollar, giving it a "considerable first-mover advantage." British pound-denominated stablecoins are less developed, but UK regulators have introduced measures such as a regulatory sandbox and finalized rules for stablecoin issuance to encourage growth. The Bank of England is also experimenting with digital money and stablecoins for cross-border payments.
Key numbers and entities
Carolyn Wilkins (Bank of England Financial Policy Committee), Tether’s USDT, Circle’s USDC, over $300 billion in total stablecoin circulation, nearly $150 billion in US Treasury bills held by USDT and USDC at end of 2025, $33 billion in Treasurys purchased by these stablecoins during 2025. The US dollar accounts for 98% of stablecoin value.
What remains unclear
The source does not specify the exact mechanisms or scenarios under which stablecoin redemptions might force Treasury sales, nor does it quantify the potential market volatility. Details on how UK stablecoin regulations will affect market dynamics or whether other currencies might gain significant stablecoin market share remain unspecified.