Stablecoin issuers are emerging as a new source of demand for US government debt as foreign official holdings lose ground.

Tether and Circle have increased their Treasury securities and repurchase-agreement holdings by about $200 billion over the past five years, equivalent to more than 40% of the decline in China’s Treasury holdings over the same period, researchers at the Federal Reserve Bank of San Francisco said .

The shift is beginning to alter the investor base underpinning the world’s largest government bond market. Stablecoin issuers’ Treasury holdings have risen more than tenfold in five years as demand for dollar-linked digital tokens expanded, while China has continued a retreat from US debt that began more than a decade ago .

The rise of crypto-linked buyers comes as the composition of US creditors undergoes a longer-term change that could affect how cheaply Washington can finance its deficits.

Foreign investors held more than half of outstanding Treasury securities around 2008, but their share had dropped to roughly 30% by early 2026, the San Francisco Fed said. Within that group, foreign governments have declined even more sharply in relative importance, accounting for just above 40% of foreign Treasury demand by early 2026 compared with nearly all of it at their peak in the 1970s.

China has been central to that shift. Its Treasury holdings peaked in late 2013 and had fallen by more than half by mid-2026 as Beijing diversified its reserve assets.

Private investors have taken a larger role as official foreign demand weakened, potentially making Treasury financing more sensitive to interest-rate changes and perceptions of US fiscal risk. Unlike central banks, which may hold Treasuries for reserve-management purposes, private investors can demand higher yields when risks rise or competing returns increase.

Stablecoin issuers add a different source of demand because their business model requires large pools of liquid dollar assets backing tokens that customers can redeem at par.