The post Cayman Islands Tops U.S. Treasury Holdings as Fed Exposes $1.4 Trillion Data Gap appeared on BitcoinEthereumNews.com.

TLDR: The Cayman Islands officially holds $427 billion in U.S. Treasuries, but Fed research puts the true figure far higher. Fed researchers identified a $1.4 trillion undercount, making the Cayman Islands the largest foreign Treasury holder. Hedge funds domiciled in the Cayman Islands absorbed 37% of all net Treasury issuance between 2022 and 2024. Unlike central banks, hedge funds can exit Treasury positions rapidly, posing a risk to U.S. debt market stability. The Cayman Islands, a Caribbean territory with just 90,000 residents, holds more U.S. Treasuries than Japan or China. Federal Reserve researchers have found that official data undercounts the island’s actual holdings by $1.4 trillion. This discovery reshapes long-held assumptions about who finances American debt. For decades, analysts pointed to Asian economic giants as the backbone of Treasury demand. The real picture, however, tells a different story entirely. Hedge Funds Drive Cayman Islands’ Treasury Holdings Beyond Official Figures Official records place Cayman Islands holdings at $427 billion, ranking it sixth among foreign holders. Japan leads on paper at $1.22 trillion, followed closely by China. However, Fed researchers determined the official count misses over $1.4 trillion in actual Cayman-linked purchases. The reason behind this gap is structural. The Cayman Islands serves as the legal domicile for roughly three-quarters of the world’s offshore hedge funds. When those funds buy Treasuries, the purchases register under the Cayman Islands, regardless of where the fund managers actually operate. Between 2022 and 2024, hedge funds domiciled there purchased $1.2 trillion in Treasury securities. That figure absorbed 37% of all net issuance during that period. As @BullTheoryio noted, that is nearly equal to what all other foreign investors combined purchased. This small Island with just 90,000 Population is the largest holder of U.S. Treasuries. Not Japan or China. For decades everyone assumed Japan and China were…

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Filed under: News - @ April 5, 2026 3:23 pm