According to Woofun AI, in the summer wave of US bond issuance, money market funds established their central position as the main demand force by absorbing an overwhelming share of 85% of the new supply. Although stablecoins are as deeply involved as the Federal Reserve, traditional cash management products have shown the strongest ability to handle short-term liquidity shocks, and have become a key cornerstone to support large-scale financing by the US Treasury.
This structured flow of capital reveals the complex intertwining of traditional financial instruments and crypto assets in the underlying asset allocation in the context of the gradual clarification of the regulatory framework.
According to US Treasury data, the net supply of treasury bonds surged by more than $550 billion between July and August, an increase of 8%. US Deputy Treasury Secretary Francis Brooke confirmed in a speech on September 22 that money market funds are the main bearers of this round of supply increases.
Meanwhile, stablecoin issuers hold nearly $200 billion in short-term government debt stocks, covering treasury notes and other securities that are about to expire. Notably, the purchasing behavior of these two types of assets overlaps significantly: stablecoin reserves are often invested through government money market funds or repurchase agreements.
Woofun AI collates data and shows that this coincidence in accounting processing makes it difficult to easily remove the actual role of cryptocurrencies in government financing. As regulatory measures such as the GENIUS Act advance, stablecoins are expected to become a larger source of demand, but their current size of nearly 200 billion US dollars mainly reflects stock rather than new purchases in summer, which is in contrast to the instant purchase behavior of money market funds in response to an increase in supply in a specific two months.
The Circle (CRCL.US) case further revealed the link between stablecoins and the IMF's underlying assets. In its second-quarter earnings report, Circle disclosed that as of June 30, approximately 84% of its reserves were held in Circle reserve funds that meet the 2a-7 rule, which means that USDC's reserve requirements are directly included in the money market fund category. The fund listed direct treasury debt liabilities of US$19.111 billion and repurchase agreement liabilities of US$46.998 billion in its annual shareholder report on April 30. Although the latter uses treasury bonds as collateral, it is an independent asset class. Since the report was prepared before the reserve data released in June, the share of assets may have changed, so these data reflect more of the overall structure than the exact allocation.
This accounting perspective shows that stablecoin issuers do not simply hold treasury bonds, but rather build reserves through complex financial instruments, making them more broadly related to US Treasury bonds than directly holding them. It also explains why data on different purchasers is difficult to clearly distinguish.
In 2026, the Federal Reserve became another major purchasing force through reserve management operations. According to the US Treasury Department, the Federal Reserve has purchased more than 300 billion US dollars of treasury bonds. The July monetary policy report shows that as of July 1, the Federal Reserve has purchased nearly 250 billion US dollars, including about 160 billion US dollars from reserve management operations, and about 90 billion US dollars from mortgages issued by institutions to support the reinvestment of the principal amount of securities. These transactions take place in the secondary market and are aimed at maintaining sufficient reserves and managing open market accounts in the system, as distinct from conventional quantitative easing (QE) or direct government financing. The Federal Reserve balance sheet confirms this expansion: Treasury bond holdings were $233.592 billion on December 31, 2025, rising to $55,482 billion by September 17, 2026.
This change in net stock reflects an increase in the share of treasury bonds in the asset portfolio, but it does not distinguish between specific purchases in July and August, highlighting the central bank's independent operating logic in maintaining the liquidity of the financial system.
Foreign investors repurchased $38.8 billion in July after three months of losing their holdings, reversing the trend of a decrease of $20 billion in April, $43.5 billion in May, and $29 billion in June. Of this, foreign private investors increased by $45 billion, while foreign official investors decreased by $6.3 billion. According to the US Treasury Department's International Capital Office, TIC data based on escrow services may obscure actual owner information due to third-party national holdings or management by foreign portfolio managers, so the overall foreign holding data of overseas investors needs to be carefully interpreted. Taken together, money market funds are still the most important purchaser as determined by the US Treasury. Stable coin issuers channel purchasing demand through reserve structures, while the Federal Reserve and foreign investors provide supplementary support in the secondary market. Under changes in the regulatory environment, stablecoins may play a more critical role in government treasury bond financing in the future, but currently their demand cannot be measured separately, and the dominant position of traditional monetary funds during the peak period of treasury bond issuance remains stable.