The U.S. Treasury is raising eyebrows about how fast stablecoins are growing.
According to a report from the Treasury's Office of Debt Management, just like how privately issued "wildcat" currencies were phased out in favor of government-backed currencies in the late 1800s, they think Central Bank Digital Currencies (CBDCs) might need to take over stablecoins as the main digital currency for tokenized transactions.
Stablecoins were a big focus in this 132-page report on the Treasury’s financial situation for Q4 2024. They highlighted how many U.S. Treasuries, or T-bills, have been scooped up by stablecoin companies like Tether and Circle. The Treasury estimates that around $120 billion in T-bills has been bought to back stablecoins with yields. Out of that amount, Tether alone has purchased almost $81 billion, making it the biggest player in the stablecoin game with USDT.
Even though some stablecoin supporters say that dollar-backed stablecoins help the dollar by driving up demand for T-bills, the Treasury doesn’t seem to be buying it.
US treasury will someday say that Bitcoin should be replaced by the cryptocurrency created by Themselves. Does it matter! They can say whatever they want to buy there's no requirement for the rest of the world to consider with even slightest seriousness.
Stablecoins have become popular due to their own merit and ease of use in the crypto world. That can never be replaced by any CBDCs, ever. US government may want to ban these stablecoins but that's highly unlikely to happen!
If I'm not mistaken, there are 193 countries in the world, almost all countries use stablecoins such as (USDT), (DAI), USDC (USDC), and others, only 11 countries have adopted a Central Bank currency (CBDC), Legally it is not easy to eliminate all existing stablecoins and make them one, namely (CBDC), it is not an easy matter and it is not easy to get support to make one and the others disappear.
I think stablecoins have now gained a lot of support as a single dollar, fiat currency combination asset in various countries, my understanding is that even though the US Treasury plans to make all stablecoins (CBDC), The idea came out while sitting in a rocking chair, but doing it was not as easy as they imagined. The US Treasury Department wants all crypto assets Bitcoin, Ethereum, BNB to be under their control, unfortunately it's all just a dream.
I'll post my comment. This kind of news I usually classify as information warfare, but it is interesting to watch. The main stablecoins USDT, USDC keep their reserves 85% in US treasuries, and everyone is happy with that. This is much better for the American economy, and if something happens and the steiblcoins lose their peg to the dollar, the American government will not bear any responsibility. It's perfect. And to keep companies from getting cocky, there should be competition in this market.
report
This is what I've been thinking after CBDC comes up, stablecoins is actually their biggest enemy.
But, without The US treasury to ban/attack stablecoins, I think people by themselves will choose CBDC over stablecoins because it's backed by government.
The bad thing is people who live outside US or country where it didn't accept USD, but they're want to hold USD. The best way is holding the stablecoin version because the rates in banks and money changer is bad, banks also charge few USD per month for holding foreign currencies.
The U.S. cbdc cannot replace stablecoins, it is easy for anyone in any part of the world to buy stablecoins, all they need is an exchange to perform the trade, stablecoins are also very important for crypto traders and for people who want to temporarily convert their volatile crypto to something stable. There is a difference between the two currencies and i don't think one can directly replace the other.
Since Tether for example is holding most of their reserves in the U.S. treasury bills, it is a good one for the U.S. dollar and the U.S. economy, so i don't know why the treasury department want stablecoins replaced.
CBDCs in each country will of course be regulated differently. In Russia, for example, CBDC will have a limit, and more than a certain amount cannot be kept on the account, and it is impossible to open a second or third account for one citizen.
Further, CBDC has such restrictions that the central bank may prohibit you from certain operations or purchase of goods with certain codes. I can name many more differences, but in my country I would rather choose USDT, DAI, USDC instead of CBDC.