The rise of stablecoins could reinforce the U.S. dollar’s global dominance and turn stablecoin issuers into major buyers of American government debt, according to a senior Bank of England policymaker who warned that the same dynamics could also amplify stress in Treasury markets during periods of turmoil.
Carolyn Wilkins, a member of the Bank of England’s Financial Policy Committee, laid out the argument in a speech at Queen’s University Belfast on Tuesday. Dollar-denominated stablecoins, she said, could strengthen the greenback by making cross-border settlement easier, expanding access to dollar-linked assets outside the United States, and increasing demand for Treasurys held as reserves backing those tokens.
The scale is already substantial. The two largest issuers — Tether with USDt and Circle with USDC — held nearly 150 billion USD in Treasury bills at the end of 2025 and purchased roughly 33 billion USD of the instruments during that year alone, according to data Wilkins cited.
The stablecoin market has now crossed 300 billion USD in total circulation, with the U.S. dollar accounting for about 98 percent of that value. That gives the dollar what Wilkins described as a considerable first-mover advantage in digital form, extending its reach into markets where traditional dollar banking access is limited.
The risk side of the ledger
Wilkins was careful to note that the relationship cuts both ways. At sufficient scale, mass stablecoin redemptions could force issuers to liquidate their Treasury holdings rapidly, potentially amplifying volatility in an already stressed market. In effect, stablecoins create a new transmission channel between crypto market turbulence and the world’s most important safe-asset market.
The concern echoes debates among U.S. regulators over whether large stablecoin reserves should be subject to bank-like liquidity rules, and it places the Bank of England alongside institutions including the Bank for International Settlements that have studied how digital dollar tokens could affect funding conditions in government debt markets.
For policymakers outside the United States, the stakes are particular. Wilkins’ speech highlighted a structural asymmetry: as dollar stablecoins expand globally, other currencies risk falling further behind in digital form, tightening dollar dominance even as regions like the euro area and the United Kingdom develop their own alternatives.
Britain’s slower lane
Sterling-denominated stablecoins have gained little traction so far. UK regulators have spent 2026 trying to change that. The Financial Conduct Authority began testing prospective stablecoin issuers through a dedicated regulatory sandbox and finalized rules for UK stablecoin issuance in June, while the Bank of England has experimented with digital money itself, including a recent test of whether stablecoins and a simulated digital pound could interoperate for cross-border trade payments.
The shift reflects a more accommodating posture after industry criticism that the Bank’s originally proposed rules could stifle innovation and push stablecoin business offshore.
The speech also lands in a week when stablecoin policy is under active discussion in Washington, where the GENIUS-style framework debates continue and banking groups are lobbying over reserve composition and redemption requirements. Eleven major institutions, including names in both banking and crypto, are planning joint stablecoin ventures, a sign that corporate adoption of tokenized dollars is accelerating regardless of the regulatory timetable.
Britain’s own experiment with a retail central bank digital currency remains in preparation, with the digital euro pilot across the Channel offering a parallel case study in how state-issued digital money and private stablecoins might coexist. Wilkins’ analysis suggests that whichever currency wins the stablecoin race gains more than transaction volume — it gains a persistent structural claim on global savings flows.
Why it matters for crypto markets
For crypto investors, Wilkins’ remarks are a reminder that stablecoins are no longer a niche plumbing topic. The Treasury holdings backing major stablecoins make issuers meaningful participants in government debt markets, and the dollar’s 98 percent share of stablecoin value means the sector’s fortunes are tied tightly to the world’s reserve currency.
The flip side is concentration risk: the crypto market’s liquidity backbone depends on instruments whose issuers must maintain flawless redemption records under stress. As stablecoin circulation grows, so does the systemic weight of a small number of reserve managers — a fact that financial policymakers from London to Basel are now publicly acknowledging.
Bitcoin traded near 75,800 USD on Tuesday, down roughly 4 percent on the day, as markets awaited the Federal Reserve’s policy decision.
Disclaimer: This article is for informational purposes only and does not constitute financial advice.
tether and circle holding nearly 150B in t-bills already makes them serious treasury buyers. wilkins isnt exaggerating the scale here
A Bank of England official warning that stablecoins could strengthen the dollar too much is a fascinating problem to flag. That 98 percent USD share of a 300 billion market is clearly what bothers London.
envy is exactly the right read, every boe speech on stablecoins sounds like they watched the boat leave and are still standing at the dock
Standing at the dock is generous. The City watched the boat leave, then wrote a speech about how the boat might capsize. Wilkins in Belfast is still a London message.
the fire sale scenario is the real story. mass redemptions during a treasury selloff and issuers dumping reserves into a thin market, that amplification cuts both ways
the redemption cascade math only works if everyone runs at once though. tbills are still the deepest market on earth, thin is doing heavy lifting here
deepest market on earth sure, but depth in a crisis depends on who is forced to sell. two issuers sitting on 150B of the same front-end paper is the correlated part
exactly. everyone treats the 150B as one big benign position but tether and circle redemptions hit in the same dollar squeeze, same paper, same week. wilkins saying it out loud in belfast is the closest we get to a warning label
yeah and remember the sept 2019 repo spike. now imagine tether forced to offload t-bills into that kind of stress because everyone redeems at once. the boe is not being paranoid here
also worth remembering tether’s bills are mostly front-end maturities, they literally structured the stack for redemptions. a run is real risk but it’s not an instant fire sale
front-end maturities help tether sure, but front-end bills are also what reprices hardest in a funding squeeze. the hedge and the stress case overlap more than youd think
the 2019 repo comparison is the scary one. forced bill sales into a funding squeeze is the exact scenario wilkins flagged
Wilkins is right that stablecoins basically hand the dollar another distribution channel. the uncomfortable part is nobody in Europe wants to hear that
first mover advantage in digital form is exactly it. dollar linked assets reaching places with no dollar banking access, that is the part policymakers keep underplaying
funny how the same people who wanted crypto banned in 2019 now warn it might make the dollar too dominant. pick a lane
To be fair to the BoE, flagging concentration risk is literally their job. 150B in T-bills from two issuers is real leverage over funding markets
to be fair to them, the market in 2019 was tiny. 150B in t-bills changes the calculus, positions are allowed to update when the facts do
Both takes can be true at once though. Dollar dominance and Treasury stress during a mass redemption run are two sides of the same coin
Wilkins giving this speech in Belfast instead of Frankfurt tells you who the audience is. The BoE mostly fears a tokenized dollar the City can’t intermediate.
the city can’t intermediate line is the whole speech. this is about london’s cut, dollar dominance is just the packaging
nobody talking about the reserve composition lobbying part. eleven institutions fighting over redemption rules is where this actually gets decided, not in a london speech
33 billion in t-bill purchases in a single year from two issuers. at that pace stablecoins become a top foreign holder of US debt and nobody voted on it
33 billion of t-bills absorbed in a single year and the boe frames it as systemic risk. imagine the tone of this speech if stablecoins were buying gilts instead lol
same speech reads as a triumph if the issuers are london banks lol. the risk framing is doing geopolitics
300B circulation, 98 percent dollars, two issuers holding 150B in bills. concentration is the word nobody in belfast wanted to say out loud