ARK Invest’s latest research highlights stablecoins’ growing role in reinforcing US financial hegemony. Since January, the stablecoin market has expanded by 20% to $247 billion, now exceeding 1% of US M2 money supply. Tether ($150 billion) and Circle ($61 billion) dominate with over 85% combined market share.
The report projects stablecoins could become one of Washington’s most valuable strategic assets within 5-10 years. This potential stems from three key developments: foreign holdings of US Treasuries have plummeted from 23% to 6% since 2011; Federal Reserve quantitative tightening continues; while stablecoins create new demand for Treasuries and dollar adoption.
Key findings include:
1. Traditional Treasury buyers (China, Japan, Canada) have reduced holdings dramatically
2. Geopolitical shifts and trade tensions accelerate de-dollarization trends
3. Stablecoins fill the demand vacuum, with Tether and Circle now ranking among top 20 Treasury holders
4. Stablecoin adoption reaches an estimated 200 million users globally
5. The sector could hold $660 billion in Treasuries by 2030, rivaling China’s current position
Notably, stablecoins serve as efficient ‘wrappers’ for short-term Treasuries while expanding dollar usage in global trade. Each stablecoin transaction simultaneously reinforces dollar dominance and generates Treasury demand. With projections suggesting 5-10x growth in stablecoin supply within five years, these digital assets may offset de-dollarization efforts and become America’s most resilient financial ally.
