The digital dollar's quiet conquest In an internet café in Lagos, a trader pays his Chinese supplier in US dollars via USDT. In Buenos Aires, a woman converts her monthly salary into digital US dollars before inflation can erode it. In Singapore, a financial firm parks several hundred million US dollars overnight in a short-term stablecoin structure. What connects these three scenes is more than a shared technology: together, they describe a structural shift in the way money moves. From crypto niche to financial infrastructureWithin the last few years, dollar-pegged stablecoins have evolved from a curiosity of the crypto world into a global payment medium with a market capitalisation exceeding 318 billion US dollars. Their transaction volume surpassed 27.6 trillion US dollars in 2024, more than the combined annual turnover of Visa and Mastercard. In 2025, growth accelerated further: volumes rose to around 33 trillion US dollars, according to Artemis Analytics. Stablecoins have become part of the global financial services infrastructure. A market dominated by a few issuers Three providers dominate this market almost entirely. Tether, with USDT, controls roughly 59 percent of market capitalisation at 187 billion US dollars. Circle, with USDC, holds around 24 percent at 75 billion. Together they account for 83 percent of the market. Ripple entered the field in December 2024 with RLUSD, and has since reached around 1.5 billion US dollars in market cap. The newcomer is growing rapidly but currently plays on a different scale. Two worlds, two use casesThe geographic distribution of usage reveals a world with two entirely distinct motivations. In industrialised nations, the United States, Europe and Singapore, it is primarily exchanges, hedge funds and DeFi protocols that use stablecoins. The International Monetary Fund estimates that around 80 percent of all stablecoin transactions are executed by automated systems: arbitrage bots, liquidity rebalancing and programmatic trading strategies. USDC has established itself as the preferred instrument for institutional actors, partly because Circle went public on the New York Stock Exchange in June 2025 and publishes monthly Deloitte attestations. Circle also states that its key stablecoins are compliant with the European Union’s MiCA framework. USDT, meanwhile, dominates global trading volumes on major exchanges such as Binance.In emerging and developing markets, the logic is different and closer to the everyday problems of people. Sub-Saharan Africa now leads all global adoption statistics: 9.3 percent of the population uses stablecoins, and in Nigeria that figure reaches nearly 12 percent, equating to around 26 million people. For many of them, USDT is not a speculative instrument but simply a more practical form of money. Roughly 70 percent of African nations suffer from acute foreign currency shortages. Businesses that need US dollars can bypass the banking system via stablecoins. In Argentina, where annual inflation still exceeded 100 percent in 2024, more than 60 percent of all crypto transactions involved USD stablecoins. Turkey, whose lira has lost more than 80 percent of its external value since 2018, shows similar patterns. In Venezuela, the government has effectively allowed the economy to run on stablecoins. Across Latin America, 71 percent of businesses use stablecoins for cross-border payments, attracted by speed, low fees and the ability to navigate capital controls.Why the business model is so profitableAnyone seeking to understand why this market is so extraordinarily profitable must examine the reserve structures. Each of the three providers collects US dollars, issues tokens in return, and invests the proceeds. All three do so almost exclusively in short-dated US government securities. According to Tether’s quarterly report, confirmed by auditor BDO for the end of September 2025, the company holds total reserves of 181.2 billion US dollars, of which 135 billion are in US Treasuries, held directly and through repo structures, 12.9 billion in gold and 9.9 billion in Bitcoin. At an interest rate environment of four to five percent on a Treasury portfolio of that scale, annual interest income amounts to roughly five to six billion US dollars. The business model mirrors that of a money market fund, with one crucial difference: none of the returns need to be passed on to token holders. Tether posted a net profit of around 13 billion US dollars in 2024, more than double BlackRock’s profit in the same year.Circle is both more transparent and more tightly regulated in its reserve management. USDC reserves consist of roughly 34 percent in direct T-Bills and just over 51 percent in overnight repos fully collateralised by US Treasuries, managed through the BlackRock Circle Reserve Fund. In practice, Circle too is a pure, extremely short-duration US Treasury portfolio. However, USDC itself is not generally a yield-bearing instrument for holders, although Circle offers separate yield solutions for eligible clients. Ripple holds RLUSD reserves exclusively in T-Bills maturing within three months and FDIC-insured bank deposits, custodied at BNY Mellon and attested monthly. Stablecoins as buyers of US government debtThe consequence of this uniform investment strategy is significant both financially and geopolitically: the stablecoin industry has become one of the largest non-sovereign buyers of American government bonds. As of the third quarter of 2025, Tether ranks as the 17th-largest holder of US public debt worldwide, ahead of Germany, the United Arab Emirates and Australia. Adding Circle’s holdings, the two largest issuers account for an estimated 200 billion US dollars in US Treasury exposure, more than many sovereign states. Apollo estimated in the summer of 2025 that the stablecoin industry was the 18th-largest external holder of US Treasuries.Washington has been supportive of this development. The GENIUS Act, signed into law in July 2025, requires stablecoin issuers to hold high-quality liquid reserves, including short-dated US Treasuries. The intent is that every dollar that flows globally into a USD stablecoin generates structural demand for American government paper. Treasury Secretary Scott Bessent projected that the stablecoin industry could generate up to two trillion US dollars of additional Treasury demand very soon. Standard Chartered and Apollo forecast a total market of two trillion US dollars by 2028. Bernstein sees four trillion by 2035. Should these scenarios materialise, the industry would absorb eight to ten percent of outstanding T-Bills and become a systemically relevant participant in the global debt market.Chart: Tether’s growing role in financing US government debt. All amounts in USD bn. | Source: Tether quarterly attestation reports and reserve updates European and Chinese concernsCritics are more cautious. Economists at the Federal Reserve Bank of Kansas City have pointed out that a dollar entering stablecoins is a dollar leaving the banking system. Banks themselves hold US Treasuries, so the net effect on Treasury demand could therefore be smaller than hoped, while bank lending to the real economy simultaneously contracts. The Columbia Economic Review concluded that stablecoins are “no fiscal cure-all”. JPMorgan, Deutsche Bank and Goldman Sachs assessed the hype as premature, even while acknowledging the underlying trend.A pronounced critique came from across the Atlantic. Jürgen Schaaf, an adviser to the European Central Bank responsible for market infrastructure and payments, warned that the dominance of USD stablecoins could undermine European monetary sovereignty and raise the EU’s borrowing costs, a digital extension of what French Finance Minister Valéry Giscard d’Estaing famously called America’s “privilège exorbitant” in the 1960s. The vision of a pan-European trading, settlement and payment layer based on blockchain technology requires stablecoins as a pivotal part of the system. Relying on US dollar-denominated stablecoins for that would increase rather than reduce Europe’s dependence on the United States. Similarly, China responded with calls to accelerate the development of yuan-backed digital currencies as quickly as possible. The underappreciated structural riskThe structural risk that rarely receives adequate attention lies in the extreme maturity concentration of stablecoin reserves. Almost exclusively T-Bills under 93 days, the precise profile of a highly liquid money market fund. In normal conditions, this is the safest conceivable investment. In a panic, however, if millions of users attempt to redeem tokens simultaneously, issuers would be forced to liquidate short-dated bonds en masse. This could cause short-term interest rates to spike abruptly, a scenario that Rohit Chopra, former director of the US Consumer Financial Protection Bureau, and the Berkeley economist Barry Eichengreen have independently identified as a genuine systemic risk. ConclusionStablecoins are no longer a footnote in financial history. They are the first global, non-sovereign monetary infrastructure simultaneously functioning as a currency substitute in developing economies, a settlement layer in industrialised markets and a structural pillar of US government financing. The boundaries between crypto instrument, money market fund and geopolitical tool have become increasingly blurred, and the shift is already unfolding at global scale. Author: Milko HenselMilko Hensel is Team Head Tech Banking at Maerki Baumann. He is responsible for the relationships with FinTechs, supports the Tech Banking team of the bank in client acquisition and management and works in strategic projects of the bank. Since 2019 he is instrumental for the development, implementation and enhancement of Maerki Baumann’s crypto strategy. Milko holds an MBA from the University of Bradford and TIAS, Tilburg, as well as a bachelor degree in banking from the Baden-Württemberg Cooperative State University in Mannheim. Important legal informationThis publication is intended for information and marketing purposes only, and does not constitute investment advice or a specific individual investment recommendation. It is not a sales prospectus and does not constitute a request, an offer, or a recommendation to buy or sell investment instruments or investment services, or to engage in any other transaction. Maerki Baumann & Co. AG does not provide legal or tax advice. Investors are therefore advised to obtain independent legal or tax advice concerning the suitability of such investments, since their tax treatment depends on the personal circumstances of the investor in question and is subject to change at any time. Maerki Baumann & Co. AG holds a Swiss banking licence issued by the Financial Market Supervisory Authority (FINMA). This publication is expressly not intended for persons domiciled in Germany or so-called U.S. persons. Editorial deadline: 30 March 2026Maerki Baumann & Co. AGDreikönigstrasse 6, CH-8002 ZurichT +41 44 286 25 25, info@maerki-baumann.chmaerki-baumann.ch | archip.ch