Stablecoins are supposed to be a safe bridge between crypto and cash. But if too many users try to cash out at once, the issuers might have to dump Treasury bills to cover the redemptions. That could ripple through short-term money markets and create a bigger shock than the crypto world expects.
As part of their reserve assets, stablecoin issuers maintain substantial holdings of short-term U.S. Treasuries. When a user redeems one dollar of a stablecoin, the issuer must give back a real dollar. If cash on hand is not enough, the issuer sells Treasuries - or borrows against them - to raise the money.
This is analogous to a bank run, except with digital tokens. A sudden wave of redemptions forces the issuer to sell bills quickly, pushing down their prices and pushing up yields. The Bank for International Settlements quantified this in Working Paper No. 1355: a $10 billion outflow that forces T-bill sales reduces weekly returns on 3-month bills by 2.9 basis points. A $30 billion outflow would cut returns by 6.4 basis points.
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Today's total stablecoin market is big. The Bank for International Settlements put it at roughly $320 billion at the end of May 2026. According to DeFiLlama, the figure was $313.2 billion in late June - with Tether near $184.9 billion and USD Coin around $73.9 billion.
If 10% of the market - roughly $31 billion to $32 billion - tried to redeem in one week, the impact would be significant. That kind of yield move can widen spreads and raise funding costs for banks and money market funds. If the selling feeds on itself, it could weaken the stablecoin pegs and push money markets into a stress cycle.
The BIS working paper notes that the effect is nonlinear: a $30 billion outflow cuts returns by 6.4 basis points, more than double the impact of $10 billion. This suggests that larger redemptions disproportionately strain liquidity, raising the stakes for any sudden run.
Market participants expect the rules to bring more oversight and potentially slow the growth of unregulated stablecoin operations. But the bigger question is whether stricter rules can prevent the fire-sale risk that BIS research highlights.
Traders and regulators will track stablecoin market caps, on-chain redemption volumes, and the gap between 3-month T-bill yields and the Federal Reserve's overnight reverse repo rate. Primary dealer auction data and issuer attestation updates will also signal stress. The 60-day comment period on the CIP rules ends later this summer.
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