Stablecoin growth could boost dollar dominance, US Treasury demand: BoE official

Bank of England policy maker Carolyn Wilkins told an audience in Belfast that dollar-pegged stablecoins could strengthen the US dollar’s international position by making cross-border settlement cheaper and broadening access to dollar-linked assets outside the United States. Wilkins said the trend might also increase demand for US Treasurys, because issuers commonly hold government bills as reserve assets. Wilkins pointed to data showing the largest stablecoin issuers are already substantial buyers of US government debt: Tether’s USDT and Circle’s USDC together held roughly $150 billion in Treasury bills at the end of 2025 and purchased about $33 billion over the year, according to figures she cited. Those reserve practices mean stablecoin firms are now important participants in the Treasury market. She warned, however, that the relationship runs both ways. If stablecoins reached a size where mass redemptions occurred, issuers might need to liquidate Treasury holdings quickly, a process that could amplify volatility in an already stressed market. Wilkins’ comments come as the stablecoin sector has expanded to more than $300 billion and remains overwhelmingly dollar-denominated — about 98% of the market’s value. By contrast, sterling-linked stablecoins have lagged. UK authorities have taken several steps this year to foster domestic development: the Financial Conduct Authority has been running a regulatory sandbox for potential issuers and finalized rules for UK stablecoin issuance in June. The Bank of England has also run experiments to test interaction between stablecoins and a simulated digital pound for cross-border trade payments, and has signaled a more accommodating stance following industry concerns that earlier proposals might curb innovation.