The US Treasury Department said it should or could replace Stable Coin with $CBDC.

The US Treasury expressed concerns about the rise of the stablecoin market and believes that privately issued stablecoins should ultimately be replaced by central bank digital money (CBDC) supported by the state, according to a Treasury report released on Wednesday.

"Similar to the way private issuances of 'wildcat' coins in the late 19th century were replaced by government-backed central bank Digital Money (CBDC), central bank Digital Money (CBDC) is likely to replace Stable Coin as the primary form of Digital Money supporting tokenized transactions," the report was compiled by the Debt Management Office of the Ministry of Finance.

Stable Coin occupies a large portion in the 132-page report of the Ministry of Finance in the fourth quarter of 2024. The report mentions that Stable Coin issuers such as Tether and Circle have purchased a large amount of U.S. Treasury bonds (i.e. T-bills). The Ministry of Finance estimates that $120 billion worth of T-bills has been purchased as collateral for generating income for Stable Coin. The majority of it, nearly $81 billion, was purchased by Tether, the company behind the largest Stable Coin in the Cryptocurrency market, USDT.

Despite the belief of many Stable Coin supporters that USD-backed Stable Coins enhance the strength of the dollar by increasing demand for T-bills, the Treasury Department does not seem convinced.

Wednesday's report focused on the frequent "decoupling" or complete collapse of Stable Coins in recent years, which the Finance Ministry believes could lead to disastrous consequences if T-bills become increasingly closely linked to the Stable Coin industry.

Stablecoins are a key component of the Crypto Assets industry. By maintaining a stable value, they enable cryptocurrency traders to enter and exit positions without touching fiat currencies such as the US dollar. In markets where obtaining US dollars is difficult, stablecoins can also serve as equivalents to the US dollar.

The Ministry of Finance estimates that over 80% of all encryption transactions involve stablecoins. Tether's USDT is undoubtedly the largest cryptocurrency in terms of volume, generating a volume of 53 billion US dollars in the past 24 hours.