Holding the safest assets in the world doesn’t automatically make you safe. That’s the uncomfortable takeaway from recent analysis by the Bank for International Settlements, which warns that Tether and Circle could face a severe liquidity crunch during a market panic, even with their reserves parked overwhelmingly in US Treasury bills.
The core problem isn’t asset quality. It’s redemption speed. If enough stablecoin holders rush for the exits at once, even a portfolio stuffed with T-bills might not liquidate fast enough to meet the demand.
Two companies, one chokepoint
Tether and Circle together control nearly 90% of the global stablecoin market, according to the European Central Bank. Tether became the seventh-largest purchaser of US Treasuries in 2024, with $33.1B in net buys over the year. If both issuers needed to dump significant portions of those holdings simultaneously, the selling pressure could ripple through money markets in ways that affect far more than crypto.
Better reserves, same fundamental problem
