Stablecoin issuers hold $80 billion in US Treasuries

Tether and Circle, among other stablecoin issuers, currently hold $80 billion in short-term U.S. government debt, showing how digital asset players are playing a bigger role in traditional financial markets.

The Financial Times reported On Friday (August 19), Tether and other such companies accounted for about 2% of the Treasuries market in May this year, according to research by JP Morgan.

Treasury bills are debt securities commonly used as cash equivalents on corporate balance sheets. JP Morgan said new issuers would have plenty of room for growth if stablecoins became a more common form of payment.

As stablecoin issuers have become more prominent, regulators have also been called upon to find ways to create set rules for the coins.

Stablecoins, which are supposed to always be backed by reserves of highly liquid traditional financial assets, saw a hitch in those plans earlier in the year as Tether’s US dollar peg warped under selling pressure following the collapse of TerraUSD.

Events in the crypto space have prompted regulators, including US Treasury Secretary Janet Yellen, to say that stablecoins present “rapidly growing risks.”

Stablecoins have seen some instability in the same way as other digital coins lately, with PYMNTS writing that the Acala dollar, or aUSD, crashed earlier in August as a hacker was able to hit 1, $28 billion from the token.

Read more: Another Hack, Another Crash as Stablecoin Troubles Follow a Familiar Pattern

The Acala dollar crashed from $1.03 to $0.009 in three hours on August 13, with the problem appearing to boil down to a coding error in the new liquidity pool supporting the ecosystem.

Because of this, an attacker was able to mint a “huge” amount of aUSD stablecoins out of the pool without providing any of the collateral needed to maintain the dollar peg.

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