Foreign Investors Sell $29 Billion of Treasury Bills as Stablecoin Issuers Gain Policy Focus

Foreign investors moved a net $133.5 billion into U.S. financial assets in June, but the flow was uneven: most of the money went into equities while short‑term Treasury bill holdings fell by $29 billion.

June flows by asset class

• Net inflow to U.S. securities and banking assets: $133.5 billion
• Purchases of U.S. equities (long‑term): $181.4 billion
• Purchases of long‑term Treasury notes and bonds: $6.8 billion
• Sales of short‑term Treasury bills: $29.0 billion

Short‑term bill holdings decline

Foreign ownership of Treasury bills slipped from about $1.430 trillion in May to $1.400 trillion in June, a reduction of roughly 2 % of the prior month’s holdings. This marks the second consecutive month of bill sales, following a $43.5 billion reduction in May.

Stablecoins as indirect bill buyers

Stablecoin issuers such as Tether and Circle hold large portions of their reserves in Treasury bills or closely related repurchase agreements. When a user purchases a stablecoin, the issuer typically places the backing cash in short‑term debt, turning the token’s demand into indirect demand for U.S. government securities.

The GENIUS Act and the Treasury’s August 17 proposed rule formalize this reserve model, requiring regulated payment stablecoins to keep liquid assets—principally cash, Treasury bills, and repo—on hand.

Scale of stablecoin reserves

• Tether’s Q2 attestation listed $114.96 billion in direct Treasury bills and $25.62 billion in overnight and term repo positions.
• Circle’s USDC backing is held in a money‑market fund that can invest in cash, short‑dated Treasuries, and repo.
• Stablecoin market total was about $302.1 billion on Aug. 21, with USDT circulating at $184.6 billion at the end of Q2.

Implications for U.S. debt demand

If stablecoin circulation expands, issuers may need to increase their Treasury bill holdings, providing a new source of demand that could offset the decline in foreign bill purchases. Conversely, when stablecoins are redeemed, issuers may sell or allow bills to mature, creating periodic outflows.

The upcoming Treasury International Capital release on Sept. 16 will show whether the foreign bill sell‑off continues and whether stablecoin reserves are growing in tandem.