The recent CCData report highlights significant financial implications stemming from the Federal Reserve's anticipated interest rate cuts, the first since March 2020. Centralized stablecoins, which rely heavily on U.S. Treasuries to back their reserves, are projected to face considerable revenue losses.
With approximately $125 billion in U.S. Treasuries securing these digital assets, each 50 basis point rate reduction could translate to a staggering $625 million decrease in interest income. Current data reveals that U.S. Treasuries constitute 80.2% of the reserves held by the top five centralized stablecoins.
Among them, Tether's USDT holds $93.2 billion, while Circle's USDC maintains $28.7 billion in Treasury assets. Additionally, other notable stablecoins like FDUSD, PYUSD, and TUSD possess comparatively smaller Treasury-backed reserves. The market's expectations suggest a cumulative rate cut of 75 basis points by the conclusion of 2024.
This scenario could lead to an alarming total revenue loss of around $1.56 billion for these stablecoins. Nevertheless, it is important to note that, despite these forecasted financial challenges, the stablecoin sector has shown remarkable resilience. In September, the total market capitalization of stablecoins increased by 1.50%, reaching an impressive $172 billion, marking an uninterrupted growth streak over the last 12 months..