Digital assets
Stablecoin reserves have become a structural bid in the shortest Treasury bills
Reserve pools backing dollar stablecoins hold an estimated $214bn of bills and overnight repo, concentrated inside three months. That is now large enough to be visible at the front end of the curve.
In this story
Illustrative. Bank Season is an editorial prototype. This story, its sources, the issuers named in it and every figure it quotes are invented to demonstrate the publication. Nothing here is reported fact or investment advice. Read the disclosure.
The interesting thing about a stablecoin has stopped being the token. It is the pile of collateral behind it, which has grown to a size where the decisions made about its composition are a money market event rather than a digital asset one. Dollar stablecoin reserves held an estimated $214bn of Treasury bills and overnight repurchase agreements in August, which is roughly 3.4% of the bill market. That is not systemic. It is large enough that the desk trading the shortest bills knows who is buying.
$214bn
Estimated dollar stablecoin reserve holdings of Treasury bills and overnight repo
Ravensworth Research compilation of issuer attestations and custodian disclosures, August 2026. Equivalent to roughly 3.4% of bills outstanding.
What makes this buyer unusual is not the size but the shape of the demand. A stablecoin issuer promises redemption at par on demand, at any hour, in any quantity the holder asks for. Nothing about that promise permits duration. The result is a portfolio crushed into the shortest instruments available, entirely indifferent to yield within that range, and completely absent from anything beyond six months no matter what the curve offers.
Estimated maturity distribution of dollar stablecoin reserves
Share of total reserve assets by remaining maturity, August 2026. Ravensworth Research compilation of issuer attestations.
Eighty two percent of the pool sits inside three months. That concentration is a regulatory expectation in two of the three regimes where the largest issuers operate and a commercial necessity in the third, because an issuer that takes duration and faces a redemption wave has to sell at a loss into exactly the conditions that caused the wave. The 2023 episode at a smaller issuer, which held bank deposits at an institution that failed, remains the industry's formative experience and it pushed everyone toward government paper and overnight repo.
What the reserve income actually funds
Reserve yield is the entire revenue line of a fiat backed stablecoin issuer. The holder receives no interest and the issuer keeps the carry, less custody, audit, distribution and compliance costs. At current front end yields the economics are extremely comfortable, which is why the number of issuers has grown and why distribution partners have started demanding a share.
Issuer economics on a $10bn reserve pool at different front end yields
| Front end yield | Gross reserve income | Operating costs | Distribution share | Pre-tax margin |
|---|---|---|---|---|
| 5.00% | $500m | $46m | $180m | $274m |
| 4.00% | $400m | $46m | $144m | $210m |
| 3.00% | $300m | $46m | $108m | $146m |
| 2.00% | $200m | $46m | $72m | $82m |
| 1.00% | $100m | $46m | $36m | $18m |
Bank Season model using disclosed cost structures at two large issuers. Distribution share assumes 36% of gross reserve income paid to exchanges and wallet partners, which is the midpoint of arrangements described publicly.
The bottom row is where the business model changes character. An issuer earning eighteen million dollars on a ten billion dollar pool cannot fund the compliance apparatus that regulators are asking for, let alone the distribution payments that drive adoption. Several of the newer entrants are therefore not really in the stablecoin business at all. They are in the distribution business, and the token is a customer acquisition cost they are willing to bear because the payment flows around it are where they expect to earn.
36%
Estimated share of gross reserve income paid to distribution partners
Midpoint of publicly described arrangements between issuers and exchanges or wallet providers. The share has risen each year since 2023.
The flow works in both directions
A structural buyer that can become a structural seller inside a week is not the same thing as a pension fund. Stablecoin supply contracts when digital asset prices fall hard, when a large trading firm unwinds a position, or when a regulator restricts access in a jurisdiction that had become a major corridor. In each case the issuer redeems tokens for dollars and raises the dollars by selling bills, and it does so quickly because the redemption promise is same day.
Two episodes of net stablecoin redemption and the front end response
| Episode | Net redemption | Period | Estimated bill sales | Move in the shortest bills |
|---|---|---|---|---|
| March 2024 drawdown | $18.4bn | Nine trading days | $14.9bn | Yields up 6bp against the curve |
| November 2025 exchange failure | $11.2bn | Four trading days | $9.6bn | Yields up 4bp against the curve |
| April 2026 price decline | $6.8bn | Twelve trading days | $5.1bn | No measurable effect |
| Cumulative 2024 to 2026 growth | plus $141bn | Thirty months | plus $118bn | Not separately identifiable |
Ravensworth Research estimates. Moves are measured against a fitted curve to strip out policy expectations and are small relative to ordinary daily variation.
The moves are small. Four to six basis points at the very front is inside the range of an ordinary settlement week, and nobody outside a money market desk would notice. The reason to track it is that the pool is growing at roughly forty percent a year, and a flow that is a curiosity at $214bn is a different conversation at $600bn. The mechanism does not change with size. The magnitude does.
We hold what the rules allow and we would hold it anyway. The difficulty is that every issuer now holds the same thing, so in a stress we are all selling the same instrument on the same afternoon. Diversification at the issuer level has produced perfect correlation at the system level, and nobody set out to do that.
Felix Aumann, founder of Ostrander Payments
The number worth following through the end of the year is the split between overnight repo and outright bills. Repo is more liquid in a stress and pushes the collateral question onto a dealer's balance sheet. Bills are cheaper to hold and have to be sold. Issuers have drifted toward repo since the 2024 episode, and if that drift continues it will show up as a quieter front end and a busier repo market, which is a trade the system has made before and will recognise.
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