Stablecoin growth could boost dollar dominance, US Treasury demand: BoE official

A Bank of England official has flagged that expanding stablecoin adoption could reinforce US dollar dominance globally while simultaneously creating new demand for US Treasury securities. Dollar-pegged stablecoins currently hold roughly $150 billion in US Treasurys as backing reserves, and the vast majority of stablecoin value - over 98% - is denominated in dollars. The BoE policymaker's concern centers on how stablecoin issuers, as they scale, would need to purchase additional government debt to collateralize their growing supplies, effectively turning crypto platforms into significant Treasury buyers.

The observation highlights an unintended consequence of stablecoin expansion: rather than diversifying currency exposure, the sector's reliance on dollar-backing could deepen both US monetary hegemony and demand for federal debt instruments at a structural level.

• Dollar-backed stablecoins already hold $150 billion in US Treasurys; further growth would increase Treasury demand from crypto issuers.
• Over 98% of stablecoin value is US dollar-denominated, concentrating rather than distributing currency risk.
• Larger stablecoin markets could create a feedback loop where issuers become major institutional buyers of US government debt.