Stablecoins Could Increase Volatility of US Treasuries

Some analysts say that as these dollar-pegged cryptocurrencies grow, their volatility could spread to the bills market, Reuters reported Friday (June 6).

Any disruption in the stablecoin market could trigger liquidations that could drive down Treasury prices, they say, according to the report.

In addition, if money moves from bank deposits to the stablecoin market, there could be less demand for U.S. Treasuries from banks, per the report.

Other analysts counter that an increase in stablecoin activity would increase the number of buyers of T-bills, which are considered to be cash-equivalent securities, around the world, according to the report.

The stablecoin bill that is making its way through Congress would require stablecoins to be backed by liquid assets like T-bills, the report said. Already, two…