Tether has emerged as a significant player in the US Treasury market, becoming the seventh-largest net buyer of Treasurys in Q2 2025, with approximately $8 billion in purchases. This positions Tether as a quasi-sovereign allocator, aligning with its strategy of backing USDT with liquid, low-risk assets while benefiting from high short-term interest rates. Tether's role highlights the institutionalization of stablecoins, marking a shift where stablecoin issuers are now substantially involved in global funding markets alongside central banks and sovereign wealth funds. However, this reliance on Treasury bills introduces potential liquidity concentration risks—any regulatory or market disturbances affecting this exposure could have widespread effects on crypto markets and short-term dollar funding channels. The current structure of the market raises questions about the implications of having a private entity like Tether within the sovereign debt landscape, adding new risks to market stability.

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