U.S. Treasury Department: Stablecoin growth increases demand for Treasury bonds, and it is estimated that $120 billion of stablecoin collateral has been invested in Treasury bonds

The U.S. Treasury Department partially reviewed the impact of digital assets in a new report, saying that "the growth of stablecoins has led to a small increase in demand for short-term Treasury bonds." It estimates that $120 billion of stablecoin collateral has been invested in Treasury bonds, most of which (nearly $81 billion) has been purchased by Tether. The 132-page report released by the U.S. Treasury on Wednesday was drafted for the Treasury Borrowing Advisory Committee and includes a small section dedicated to digital assets, studying mainstream digital assets such as Bitcoin and stablecoins. The report states: "Despite a small base, digital assets have achieved rapid growth. Growth comes from both native cryptocurrencies such as Bitcoin and Ethereum, as well as stablecoins. The market value of digital assets is still low compared to other financial and physical assets, and the growth so far does not seem to have cannibalized demand for Treasury bonds." The U.S. Treasury Department said: "Stablecoins play an indispensable role in intermediating transactions in the digital asset market, and more than 80% of crypto transactions currently use stablecoins as part of the transaction." It also expressed its views on the future of stablecoins, saying that while stablecoins are expected to continue to grow, they may encounter resistance. "Medium-term regulatory and policy choices will determine the fate of this "private currency". History shows that non-compliant "private currencies" lead to financial instability and are therefore very unpopular." In the part where the Treasury Department reviews Bitcoin, the report points out that broadly speaking, "as the market value of digital assets grows, structural demand for U.S. Treasury bonds may increase, both as a hedge against downside price fluctuations and as an "on-chain" safe-haven asset." (The Block)