The growing link between stablecoins and the global economy
Stablecoins have moved from a niche idea to a major part of digital finance. They have experienced remarkable growth rates in recent years, with the two largest coins, USD Tether (USDT) and USD Circle (USDC), leading the ranks. People turn to stablecoins because they are fast, low-cost, and transparent. These features are especially valuable in places with high inflation, unstable currencies, or expensive remittances.
What do Stablecoins have to do with the US?
Stablecoins are designed to stay close in value to the US Dollar and, to achieve that, most issuers hold short-term US government bonds and other high-quality assets. This setup is similar to money market funds, but instead of offering fund shares, stablecoin issuers create digital tokens that can move across blockchain networks.
As adoption of stablecoins grows, so does demand for short-term US Treasuries. Stablecoin issuers buy large amounts of these because they are safe, easy to trade, and pay steady interest, which helps them keep their stablecoins fully backed. More than 80 percent of stablecoin transactions now take place outside the United States*.
US Treasuries are central to the global financial system. Foreign investors continue to buy them because the Dollar is still the main reserve and transaction currency. Even with rising US debt levels, strong demand helps keep borrowing costs low.
Stablecoins strengthen this link. By holding large amounts of government bonds as reserves, they connect global digital payments with the world’s most trusted safe asset. This brings benefits such as faster payments and wider access to stable digital currencies.
The US is in debt
The United States carries a high level of public debt, currently around 122 percent of its GDP. Part of this increase comes from an aging population, which raises long-term spending on programs such as Medicare and Social Security. At the same time, gaps in tax collection contribute to the fiscal imbalance. Even so, global investors continue to buy US Treasuries because they remain the most trusted safe asset. This strong and steady demand helps keep borrowing costs low.
But it also introduces new risks.
The effect on the global economy
During periods of high market uncertainty, for example when interest rates rise sharply, major geopolitical events occur, the global market can be shaken in an instant. In such moments of market stress, users may prefer to hold cash instead of digital tokens, triggering fast and coordinated withdrawals. Because stablecoins settle instantly and operate around the clock, these shifts can happen much faster than in traditional finance. That speed increases the pressure on issuers to liquidate their Treasury holdings quickly, which is what turns normal selling into a fire sale.
When this happens in the market for the world’s safest assets, the impact can spread quickly. Because the Dollar is the main reserve currency, any disturbance in the Treasury market spreads across exchange rates, stock markets, and commodity prices. This creates a chain reaction that can be felt worldwide within hours.
How global payment markets change with the rising adoption of Stablecoins
- Fewer intermediaries: Stablecoins let money move directly between users, reducing the need for banks in cross-border payments.
- Competition with local currencies: In countries with weaker currencies, people may prefer dollar-based stablecoins for everyday transactions.
- More power for large issuers: As a few stablecoin networks grow, they can influence standards and shape how digital payments work worldwide.
- Faster spread of financial shocks: Because transactions settle instantly, market stress can move across borders much more quickly.
The global use of stablecoins shows the need for clear regulation and close cooperation between policymakers to ensure safety and consistent oversight.
The need for clearer rules for stablecoins
The GENIUS Act is the United States’ attempt to bring stablecoins into a regulated environment while supporting their growth. It aims to reinforce the international use of the Dollar at a time when some countries are reducing their reliance on it. Stablecoins may help counter this trend by making digital dollars easier to use worldwide.
Yet regulation remains uneven. Even with standards from organizations such as the Financial Action Task Force, countries apply different rules. This creates opportunities for regulatory arbitrage, where issuers operate in regions with fewer requirements. It also creates uncertainty for users and institutions.
Preparing for the future of digital finance
Undeniably, stablecoins are becoming part of the global financial infrastructure.
Stablecoins can strengthen the Dollar’s international position and improve access to digital payments. But they also link the growing crypto economy more tightly to the US Treasury market. If that market faces turbulence, the effects could move faster and hit harder through digital channels.
The priority now is ensuring strength, transparency, and resilience as these markets scale.
At Moonlet, we are focused on supporting this next phase. Our non-custodial staking tools, validator infrastructure, and analytics platforms give users confidence and full visibility as the Web3 ecosystem evolves. As traditional and digital finance become more connected, reliable infrastructure becomes essential.
Sources and further reading:
https://www.brookings.edu/articles/the-rise-of-stablecoins-and-implications-for-treasury-markets/
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