Stablecoin demand can help the U.S. government finance short-term Treasury debt but cannot fill a shortfall in demand for long-term bonds. The key is not the total amount of money, but maturity.

On Aug. 30, foreign media outlets including blockchain publication CryptoSlate reported that U.S. stablecoin reserve rules tie funds to assets with maturities of 93 days or less, meaning they do not flow directly into 10-year and 30-year long-term debt. The U.S. Treasury, meanwhile, said on Aug. 19 it would expand the size of its buybacks to support liquidity in the long-term Treasury market. The two tracks are separate policies, and no evidence has been confirmed that stablecoin reserves are directly linked to long-term buybacks or bitcoin prices.

The GENIUS Act requires licensed payment stablecoin issuers to maintain at least $1 in identifiable reserves for every $1 of stablecoins in circulation. Reserve assets include U.S. dollar cash, Federal Reserve deposits, withdrawable bank deposits, Treasuries with remaining maturities of 93 days or less, eligible overnight repos and reverse repos, related government money market funds, similar liquid assets approved by regulators, and eligible tokenised assets. Newly issued 10-year or 30-year Treasuries are excluded from eligible reserves.

Implementation of the system is still under way. The GENIUS Act was enacted in July 2025, and the general effective date was set as the earlier of Jan. 18, 2027, and 120 days after final implementing rules are confirmed. The Office of the Comptroller of the Currency proposed a regulatory plan in February and said on Aug. 19 it would prepare final rules by November. The fact that issuers currently operate reserve structures focused on short maturities does not mean the system has been completed.

Circle's USDC reserves are an example of this short-maturity structure. Circle disclosed USDC in circulation of $73.269 billion as of June 30, and as of July 31 reserve assets were $71.904 billion, with $71.826 billion in circulation. Of that, $60.717 billion was held in the Circle Reserve Fund, including $52.723 billion in overnight Treasury repos and $7.179 billion in Treasuries. The $11.187 billion held outside the fund was mostly cash deposits at regulated financial institutions, and all directly held Treasuries listed in the report mature by Sept. 22.

It is difficult to treat stablecoin market growth and the size of new U.S. government funding needs as the same concept. During the second quarter, Circle customers issued $83.004 billion in USDC and redeemed $86.784 billion, resulting in net redemptions of $3.78 billion. Circulation at the end of the quarter was up 19 percent from a year earlier but about $2 billion lower than in December last year. The Treasury Borrowing Advisory Committee made a similar point. Stablecoin issuance can increase demand for short-term Treasuries, but if users shift funds from bank deposits or money market funds that already supported short-term Treasuries, part of the effect could be offset. Demand flowing in from new overseas dollar users could be purely additional, but the share has not been officially confirmed.

The long-term bond market moves under a separate policy. On Aug. 19, the Treasury said it would more than double the per-operation cap for liquidity-support buybacks in the 10-year to 20-year and 20-year to 30-year sectors to at least $4 billion from $2 billion. Seven operations are scheduled from Sept. 9 to Nov. 4, on Sept. 10, Sept. 24, Oct. 1, Oct. 8, Oct. 15, Oct. 27 and Nov. 4. That raises the total cap for those sectors to at least $28 billion from $14 billion. The caps are only ceilings, and the Treasury may buy less than the maximum if purchase conditions are not met.

The purpose of buybacks is not to reduce the government's net borrowing, but to improve trading liquidity in older Treasuries. When new Treasuries are issued, existing benchmarks become off-the-run and trading can shrink while dealers' inventory burdens may rise. The Treasury buys such bonds to support market functioning, but the funding for purchases, like other spending, must be raised separately, so the government's overall borrowing needs do not decline. Josh Frost (조시 프로스트), then deputy assistant secretary for financial markets, described the program as a conventional market-function support tool to reduce fragmented supply and secure dealer capacity.

Buybacks are also different from quantitative easing. When the Federal Reserve buys Treasuries, it supplies new reserves, but the Treasury buys Treasuries with existing funds in the Treasury General Account, retires the bonds, and must refill the funds through taxes or new debt issuance. The Treasury projected net marketable borrowing held by the public of $739 billion for July to September and $628 billion for October to December. In August refunding auctions, it issued $58 billion in 3-year notes, $42 billion in 10-year notes and $25 billion in 30-year bonds, raising about $28.7 billion in new funds.

Research by the Bank for International Settlements also supports this maturity difference. A study analysing data through March 2026 found that a $3.5 billion stablecoin inflow immediately lowered 3-month Treasury yields by 0.71 basis points, by about 4 basis points within 10 days, and by about 5 basis points at the estimated trough. Spillover into longer maturities was limited or absent.

The link to bitcoin is more indirect. Long-term Treasury yields can affect discount rates for risk assets and investor sentiment, and liquidity improvements from Treasury buybacks could also influence bitcoin through indirect channels. But a causal link that stablecoin inflows, long-term buybacks or falling long-term yields directly lift bitcoin prices has not been confirmed.

Ultimately, stablecoins could become a larger funding source supporting U.S. short-term Treasury financing if they are accompanied by new dollar demand, but the long-term Treasury market still depends on investors willing to take on duration. The Treasury's liquidity-support buybacks and bitcoin's financial-conditions channel are moving separately from stablecoin reserves.