Stablecoin Organizations Now the 18th Largest Creditors of the United States

The US government has become indebted to stablecoin organizations amidst an unprecedented ballooning of public debt.

Stablecoin organizations are now the 18th largest creditors of the United States. Image: CNN

According to data compiled by Tagus Capital, stablecoin organizations hold over $120 billion USD in US Treasury bonds, making them the 18th largest global creditors of the stars and stripes. This achievement surpasses even countries with large current account surpluses such as Germany and South Korea.

Tether alone, the behemoth behind the stablecoin USDT, holds $91 billion USD in US Treasury bonds. Following closely is Circle, the parent company of USDC, holding short-term US debts, including repo contracts, totaling up to $29 billion USD.

Drawing from US Treasury data, the country's pile of public debt is rapidly expanding. Federal government borrowing to cover operating expenses surpassed $34 trillion USD earlier this year.

To put this into perspective, the Washington administration is paying $2 million USD in interest every minute on its "debt bomb." Yesterday, the Congressional Budget Office projected that national debt could approach $50 trillion USD by 2034, equivalent to 122% of annual economic output.

Some experts refer to the US debt record as a "sad achievement." Despite the dangerously high levels of public debt posing risks to both the economy and national security, the US government cannot cease borrowing. The mounting debt burden has led the US Treasury to ramp up bond issuance since 2023.

The IMF also expresses concerns that high national debt and interest rates could significantly increase borrowing costs, causing global financial instability. Conversely, some cryptocurrency experts argue that this narrative could spur broader acceptance of alternative assets like Bitcoin and gold. In a recent statement, Circle's CEO projected that stablecoins could account for up to 10% of global currency in the coming decade.

Coincidentally, among the many cryptocurrency bills in the US, stablecoins are among the most discussed topics. However, stablecoin legislation has yet to find a way forward, with hopes that the US will formally pass it before this year's election.

In April, House Financial Services Committee Chairman Patrick McHenry expressed optimism that the US would have stablecoin legislation by the end of this year. McHenry confidently stated, "We are very close to the issue, we just need a legislative schedule to complete everything in the Senate."

He also echoed the sentiments of Republican member Tom Emmer, suggesting that a lame-duck session might be the opportune time to attach a bill to a must-pass measure. A lame-duck session occurs whenever a session of Congress is held after successors have been elected but before the new term begins, typically before January 2025.