Stablecoin issuers hold more US debt than Berkshire Hathaway: Report

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Stablecoin issuers such as Tether (USDT) and Circle have amassed a significant share of the United States Treasury market, outperforming major traditional finance players.

Various stablecoin providers collectively held $80 billion in short-term US government debt as of May 2022, according to a study by investment bank JPMorgan, as the Financial Times reported on August 20.

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Tether, Circle and other stablecoins firms account for 2% of the total market for US Treasury bills, which is a much larger share of T-bills than Warren Buffett’s wholly owned investment giant Berkshire Hathaway.

According to the data, stablecoin issuers have outperformed offshore money market funds (MMFs) and prime market MMFs in terms of their Treasury-bill investment ratios.

US Treasury Bill Investor Structure. Source: JP Morgan

Considered a low-risk asset, Treasury bills are debt instruments commonly used by companies as cash equivalents on corporate balance sheets. Tether and Circle – the world’s largest asset-backed stablecoin, issuers of Tether and USD Coin (USDC) – have pledged earlier this year to buy US Treasury bills, cutting reliance on commercial paper.

The move comes amid uncertainty surrounding algorithmic stablecoins as TeraUSD (formerly UST) lost its US dollar peg in May 2022.

Unlike algorithmic stablecoins, which rely on algorithms and smart contracts to support their US dollar support, asset-backed stablecoins such as USDT and USDC are designed to guarantee 1:1 pegs by holding cash and normal cash equivalents. is designed for. According to data from CoinGecko, USDT has a market cap of $67.6 billion at the time of writing, while USDC has a market cap of $52.4 billion.

related: Tether Reserve Verification to be Conducted by Leading European Accounting Firm

As previously reported, USDC has seen a significant increase in market cap, while Tether’s market dominance has been declining since May. “We believe that one of the primary drivers behind the dramatic change is the improved transparency and asset quality of USD Coin reserve assets,” JP Morgan reportedly said.