Stablecoin issuers rank as 18th largest holder of US debt

The Stablecoin legislation put forward by the American government is noted, and Stablecoin Issuers is the ultimate source of demand for the US treasury. According to the recently available data, Stablecoin Issuers possess more than $120 billion in American treasury notes. Stablecoin Issuers is the 18th largest holder of US debt, followed by Germany and South Korea. Tether is the globe’s leading dollar-pegged cryptocurrency by market capitalization, featuring short-dated American debt. It is expected that America will get a new stablecoin law before the Presidential elections commence.

Prominent political leaders in the US hope that the country will have a new Stablecoin law by the end of 2024. An attempt to include a stablecoin regulation failed, and the US legislators say it is best to introduce comprehensive legislation for Stablecoins. It is to be noted that the unsuccessful sessions happen at a time after elections before the President’s designate takes over in January 2025. Knowing that the American government debt surpassed the $34 trillion mark during the initial days of 2024 is quite surprising.

Market reports indicate that interest payment on the debt, also called debt servicing cost, will reach $892 billion in 2024. The debt burden has compelled the Treasury to step up bond supplies recently, and the information available from the Congressional Budget Office indicates that America’s debt will reach $50 trillion by 2034. The Congressional Budget Office had made strict warnings that mounting debt concerns would result in a difficult-to-resolve market chaos. The drop in the US dollar price and political uncertainty will have a huge impact on the American economy, both traditional and digital.

Crypto market experts also shared a similar view, saying that debt concerns and loss of interest in Treasuries will ultimately result in an inclination towards alternative assets like Bitcoin and gold. Stablecoins are priceless cryptocurrencies that can be pegged to another currency or financial instrument. They are excellent alternatives to highly volatile cryptocurrencies like the one and only Bitcoin. 

Stablecoin is more relevant and useful than cryptocurrencies, which are volatile as a medium of exchange. It is possible to peg Stablecoin to a currency like the American dollar or the price of a commodity like gold. Stablecoins showcase price stability by maintaining reserve assets as collateral and are subject to constant scrutiny by regulatory bodies. It has a great potential to massively influence the wider global financial market and ecosystem.

Although Bitcoin is the most popular cryptocurrency, it has some negative sides, including price volatility and exchange rate. Intraday swings associated with Bitcoin will often go wild, and stablecoins address these issues by keeping the cryptocurrency value steady. There is a school of thought that Stablecoin is the best solution for a problem, considering the availability and popularity of the US dollar. There are four types of stablecoins: fiat-collateralized stablecoins, commodity-backed stablecoins, crypto-collateralized stablecoins and algorithmic stablecoins. A typical fiat-collateralized stablecoin maintains a fiat currency reserve like the US dollar as collateral.