New research from the Bank for International Settlements (BIS) reveals striking statistics about stablecoin market influence. While stablecoin issuers have been noted as major holders of short term Treasuries, surpassing the holdings of countries such as China, the BIS highlights that during 2024, they were the third largest purchasers of Treasuries bills*. That figure is based on the net increase in stablecoin reserves. Regarding the impact on Treasury rates, the BIS study notes that a naive analysis of a $3.5 billion change in stablecoin holdings of Treasury bills implies a 25 basis point (0.25%) change in short term Treasury yields. However, it says this significantly overstates the impact, because many factors will simultaneously influence both stablecoin demand and Treasury rates. To try to isolate the impact of stablecoins, it explored major crypto events unrelated to movements in interest rates. Based on its research, the BIS concludes that the impact of sales of $3.5 billion of Treasuries by stablecoin issuers causes an increase in Treasury bill yields of six to eight basis points (0.06% – 0.08%). This is a much bigger effect than purchases, because sales are frequently more urgent given they may involve a mini crisis. A similarly sized purchase of Treasuries would result in a decline in Treasury rates of three basis points (-0.03%). The paper also noted that stablecoins are still comparatively small and the research is based on current volume levels. As stablecoins grow, the relative impact will increase. This will also create financial stability risks because of their effect on Treasury rates if there’s a run on a stablecoin. Additionally, with larger volumes of stablecoins, it will reduce the ability of the Federal Reserve to influence interest rates.