Stablecoins and U.S. Treasury Bonds: A New Link in Digital Finance

If someone discussed digital currencies a few years ago, it was easy to view it as a technological race: who would launch their central bank digital currency first, whose blockchain was more advanced, who had faster payment speeds, and who could bypass the traditional banking system to complete cross-border settlements.

But by 2026, after the digital RMB, USD stablecoins, tokenized deposits, and tokenized government bonds have all gone through their first rounds of experimentation, a question worth re-examining is becoming increasingly clear: In the competition among digital currencies, what is truly being contested—the “digital” or the “currency”? I will outline the differing development paths of China and the U.S. in the field of monetary digitization across two articles.

My conclusion is:

Digital technology itself cannot create a dominant currency, but it can very efficiently amplify the network effects already possessed by a dominant currency.

The development paths of digital currencies in China and the United States have been asymmetrical from the start. China has chosen a typical central bank digital currency route, with the People's Bank of China driving the construction of the digital RMB system.

The United States has not yet launched a Federal Reserve retail digital dollar for the public. What is truly growing rapidly are private dollar stablecoins such as USDT and USDC, along with bank deposit tokens, tokenized Treasuries, and on-chain settlement systems.

As of April 2026, the total market capitalization of global stablecoins is approximately $315 billion. More importantly, the BIS estimates that about 98% of this is denominated in U.S. dollars. This data is crucial, as it demonstrates that the blockchain era has not naturally led to所谓“去美元化”. On the contrary, stablecoins are becoming a new channel for the U.S. dollar to enter the internet economy.

To understand why stablecoins are almost entirely dominated by the dollar, set aside digital technology for a moment and look solely at the traditional monetary system. According to IMF COFER data, in the first quarter of 2026, the U.S. dollar accounted for 57.13% of global allocated official foreign exchange reserves, while the renminbi accounted for 1.99%.

The disparity is even more evident when looking at foreign exchange trading. According to the BIS（International Settlements） triennial survey in 2025, the US dollar appears on one side of 89.2% of global foreign exchange trades, while the renminbi has risen to 8.5%, becoming the fifth most traded currency worldwide.It should be noted that since each foreign exchange transaction involves two currencies, the sum of the percentages for all currencies equals 200%; this does not mean that “89.2% of trades involve only the US dollar.”

In July 2026, the U.S. dollar accounted for approximately 50.99% of global payment values via SWIFT, while the renminbi represented about 3.10%, ranking fifth. SWIFT’s official Global Currency Tracker released this monthly data in August 2026.

A harsh reality cannot be ignored: USDT and USDC first inherit not the trust of blockchain, but the existing trust and network of the U.S. dollar. A foreign company accepts USDC not primarily because it believes Circle possesses the world’s most advanced blockchain technology, but because it ultimately receives a financial instrument pegged 1:1 to the U.S. dollar, redeemable for dollars and usable to purchase dollar-denominated assets.

In this sense: it is not stablecoins that created the international status of the US dollar, but rather the international status of the US dollar that created the most fertile soil for US dollar-backed stablecoins.

Although traditional U.S. dollars are already very powerful, they are not a truly "internet-native asset." International dollar flows still heavily rely on bank accounts, correspondent banks, compliance reviews, business hours, and traditional financial market infrastructure.

Stablecoins and tokenized bank deposits are precisely what change this layer.

They can operate 24/7, interact with smart contracts, automate settlement with on-chain financial assets, and bring together previously separate "asset legs" and "funding legs" into a single program.

This is not just theoretical. In May 2025, J.P. Morgan, Chainlink, and Ondo completed a cross-chain test: tokenized U.S. Treasuries and J.P. Morgan USD deposits achieved real-time Delivery versus Payment.

Please note that the cash leg used here is not USDT or USDC, but U.S. dollar deposits within the J.P. Morgan system.

The DTCC's experiment is more intuitive. In summarizing its Great Collateral Experiment, DTCC stated that assets could move directly on-chain, rules were automatically enforced, and parts of the collateral settlement process were reduced from hours to seconds.

Therefore, the claim that “digital technology is just a gimmick” is clearly invalid. A more accurate assessment is: digital technology has not created the creditworthiness of the U.S. dollar, but it is reducing the friction in the operation of the dollar system. And for a currency that already possesses significant network effects, further reductions in operational friction may further amplify its existing advantages.

Let’s look again at how Wall Street is embracing tokenization.

What is now being taken seriously by major financial institutions is not just USDT or USDC, but also tokenized bank deposits, tokenized central bank reserves, tokenized money market funds, tokenized government bonds, and new settlement infrastructure.

A representative example is Project Agorá, led by the BIS.

This project brings together multiple central banks and over 40 financial institutions to test cross-border settlement by placing tokenized commercial bank deposits and tokenized central bank reserves within a programmable system, rather than simply replacing bank money with stablecoins.

In a real-value test conducted in July 2026, 28 financial institutions and central banks completed 17 types of transaction scenarios involving currencies such as the US dollar, euro, Japanese yen, British pound, Korean won, and Swiss franc. The average time from payment initiation to settlement was approximately 80 seconds.

This provides an important insight:

The digital currencies truly adopted by Wall Street in the future may not be USDT or USDC as we know them today. The final形态 could very well be a coexistence of stablecoins, bank deposit tokens, central bank money, and tokenized financial assets. Therefore, the true revolution is less a “stablecoin revolution” and more accurately called a “tokenization revolution of financial assets.”

Stablecoin trading volume is extremely impressive, but not all on-chain traffic should be called "payments".

This is another area where the scale of stablecoins is easily misjudged. In 2025, global on-chain stablecoin transaction volume is projected to reach approximately $35 trillion. $35 trillion is an extremely large figure. However, the Bank for International Settlements further estimates that only about $390 billion of this represents “payment-related” stablecoin flows.

Why is there such a big difference between the two?

The majority of on-chain stablecoin traffic originates from: cryptocurrency trading, exchange deposits and withdrawals, arbitrage, high-frequency bots, DeFi operations, smart contract interactions, and institutional fund transfers. After applying filtering algorithms with partners such as Artemis and Allium Labs, Visa estimates that the "adjusted" stablecoin transaction volume over the past 12 months was approximately $10.2 trillion—still significantly lower than the unadjusted total volume. Additionally, about 36% of the adjusted volume in 2025 is still tied to centralized exchange deposits and withdrawals.

On the other hand, stablecoins are indeed entering real-world commercial payments. Artemis surveyed 22 stablecoin payment companies and added estimates for another 11, finding that between 2023 and August 2025, identifiable stablecoin payments totaled approximately $136 billion. Of this, the annualized volume of B2B stablecoin payments in August 2025 reached approximately $76 billion.

Therefore, a more objective conclusion is: stablecoin payments are growing rapidly, but the claim that “stablecoins have already taken over global payments and Wall Street settlements” is clearly exaggerated at this point.

The technological trends are real. The scale revolution has not yet fully occurred.

If there's one thing to pay the most attention to regarding the digital dollar, I believe it's not whether you can use USDC to buy coffee—it's U.S. Treasury bonds.

The reserves of major U.S. dollar stablecoin issuers are increasingly composed of short-term U.S. Treasury securities, repurchase agreements, and cash. For example, according to Tether’s publicly disclosed reserve report, audited by BDO, for the fourth quarter of 2025, as of the end of 2025: Tether directly held over $122 billion in U.S. Treasury securities; when including indirect exposures such as overnight reverse repurchase agreements, total U.S. Treasury exposure exceeded $141 billion. Tether also disclosed that the circulating supply of USDT at the end of 2025 was approximately $186 billion. (Note: These figures are disclosed by Tether and its auditor and do not constitute a government audit of Tether’s balance sheet by the U.S. Department of the Treasury.)

Circle is similar. Circle disclosed that USDC reserves include bank deposits, overnight U.S. Treasury repurchase agreements, and U.S. Treasuries with maturities of three months or less; the Circle Reserve Fund is managed by BlackRock.