Stablecoins are supposed to be a safe bridge between crypto and cash. But a sudden rush to redeem them could force issuers to sell short-term Treasury bills in large amounts. That selling could push up short-term yields and spill stress into money markets.
Fiat-backed stablecoins like Tether (USDT) and USD Coin (USDC) hold reserves of cash, cash equivalents, and short-term government debt. When a user redeems a stablecoin for dollars, the issuer must deliver cash. If its overnight liquidity buffers are not big enough, the issuer sells Treasury bills or borrows against them.
A concentrated wave of redemptions from the two largest stablecoins - Tether at $184.9 billion and USDC at $73.9 billion - could force billions of dollars in forced sales. That could create a feedback loop: falling T-bill prices weaken the reserve backing, which may trigger more redemptions and further selling.
The Bank for International Settlements modeled the price impact of stablecoin-driven T-bill sales in Working Paper No. 1355, published June 2, 2026. A basis point is one-hundredth of a percentage point. The paper estimates that $1 billion in forced T-bill sales would lower weekly returns on 3-month bills by about 0.3 basis points.
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Larger sales produce a bigger effect. A $30 billion sale would reduce them by about 6.4 basis points.
That scale is within the range where the impact becomes material for money market liquidity.
To put it in perspective, Tether alone holds $184.9 billion in market cap. Even a small fraction of that amount redeemed in a concentrated period could push up short-term yields and strain the market for Treasury bills.
Given that stablecoin reserves are heavily concentrated in short-term Treasuries, a redemption wave of $31 billion would represent a notable share of weekly 3-month bill auction supply, making the BIS estimates especially relevant for money market participants.
The concentration of stablecoin reserves in short-term Treasuries means that even a moderate redemption wave could have outsized effects on a market that already handles large volumes. Money market funds and primary dealers often absorb such sales, but a sudden forced liquidation could amplify volatility, especially if multiple issuers sell simultaneously.
On June 18, 2026, U.S. agencies including the National Credit Union Administration proposed new Customer Identification Program rules for stablecoin issuers. The comment window is open for 60 days.
Investors should monitor three signals. Live stablecoin market caps from DeFiLlama can show whether total supply is shrinking. The spread between 3-month T-bill yields and the Fed's overnight reverse repo rate can reveal stress in money markets. Checking auction volumes from primary dealers and reviewing periodic reserve attestations from issuers can help gauge demand shifts.
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