Foreign investors sold $29 billion of Treasury bills in June while pouring $181.4 billion into US stocks. Washington is now looking to stablecoin issuers such as Tether and Circle, which already hold well over $100 billion in Treasury bills, to help fill the gap.
Foreign investors sent a net $133.5 billion into US financial markets in June, but during the same month they sold $29 billion of Treasury bills. Most of the incoming money went into stocks, while demand for short-term government debt went the other way.
That split matters because stablecoin issuers keep much of the money backing their tokens in Treasury bills and closely related assets. If foreign buyers keep reducing their bill holdings, a larger stablecoin market could become another source of demand for that debt.
Foreign buyers favored stocks over bills
The Treasury International Capital report for June showed foreign investors bought $181.4 billion of US equities but only $6.8 billion of long-term Treasury notes and bonds. At the same time, they sold $29 billion in short-term Treasury bills.
Foreign holdings of short-term Treasuries fell from about $1.430 trillion in May to $1.400 trillion in June, a decline of roughly 2%. It was the second straight monthly reduction: investors sold $43.5 billion in May and $29 billion in June, a two-month total of about $72.5 billion. The data cannot say why those investors sold, but the mix points to a selective shift toward US stocks and away from cash-like government debt.
Stablecoin reserves already hold billions in bills
A stablecoin issuer takes in a customer's dollar and owes that customer a dollar back on demand, so it parks the backing money in assets it can sell quickly. Treasury bills fit that role well, and the GENIUS Act formalized the model by requiring regulated payment stablecoins to hold liquid reserves.
Tether's second-quarter attestation listed $114.96 billion of direct Treasury bills and another $25.62 billion in overnight and term repo positions. June's entire $29 billion foreign bill sale equaled roughly one-quarter of Tether's direct bill portfolio, though the data cannot connect the foreign sales to any specific purchase by Tether or another issuer. Circle uses a similar model for USDC, holding most of its backing in a government money-market fund that can own cash, short-dated Treasuries, and overnight Treasury repo.
New token issuance hasn't kept pace
The mechanism only creates fresh Treasury demand when stablecoin circulation expands or an issuer shifts reserves out of another asset. Tether reported $184.6 billion of USDT in circulation at the end of the second quarter, only about $446 million more than at the end of the first. The entire stablecoin market stood near $302.1 billion on Aug. 21, down 0.14% over the prior 30 days.
Those figures rule out the simple claim that new token creation absorbed the $29 billion foreign bill sale. The next TIC release, scheduled for Sept. 16, will cover July data and show whether foreign bill sales continue alongside flat token supply, or whether stablecoin circulation and issuer bill holdings start moving up together.
Source: CryptoSlate
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