By Ovunc Kutlu
ISTANBUL (AA) - Growth in stablecoins is increasing demand for short-dated Treasury bills, the US Treasury Department said Wednesday in a report.
Stablecoins, which are designed to be pegged one-to-one with the US dollar to ease exchange for crypto users and investors, have gained popularity as they have been attractive collateral to lend on decentralized finance (DeFi) networks, said the report.
Their use has grown rapidly in recent years as the digital asset market has matured, including increased demand for crypto assets with stable cash-like characteristics, it added.
The report said although there are different types of stablecoins, fiat-backed ones have shown the most significant growth.
"Stablecoins play an integral role intermediating transactions in digital asset markets - over 80% of all crypto transactions now use a stablecoin as one leg of the transaction," it added.
The Treasury Department said digital assets have witnessed rapid growth albeit from a small base, adding their growth has come both from native crypto assets like Bitcoin and Ethereum, as well as stablecoins.
While household and industry adoption of cryptocurrencies has been limited to holding digital assets for investment purposes, the market capitalization of digital assets remains low compared to other financial and real assets, it added.
"Primary use case for Bitcoin seems to be a store of value aka 'digital gold' in a DeFi world; speculative interest seems to have played a prominent role in the growth of digital tokens thus far," said the report.