Stablecoins Set to Scoop Up $1T in T-Bills by 2028: Standard Chartered

Stablecoin issuers could become one of the largest structural buyers of short-term U.S. Treasury bonds within the next three years, according to a new report from international banking group Standard Chartered.

Geoff Kendrick, Global Head of Digital Assets Research, and John Davies, US Rates Strategist at Standard Chartered, predict that stable currency The market capitalization will reach $2 trillion by the end of 2028, compared to about $309 billion today. CoinGecko data.

That growth alone would generate roughly $0.8 trillion to $1.0 trillion in increasing demand for U.S. Treasuries as issuers hold short-term Treasuries as reserves, the analysts said in a note shared with Declutter.

Combined with expected Federal Reserve purchases of $500 billion to $600 billion through Reserve Management Purchases and a similar amount from reinvesting maturing mortgage-backed securities, Kendrick and Davies estimate total demand for new Treasury bonds between now and 2028 at about $2.2 trillion.

“Our projections indicate excess demand for government bonds of USD 0.9 trillion if their share of outstanding debt is not increased – in other words, government bonds could become too scarce if no action is taken,” Kendrick and Davies wrote.

The analysts note that one way to offset the imbalance would be to increase government bond issuance while reducing the supply of long-term bonds.

“Shipping $0.9 trillion of T-bonds to T-bills to meet excess demand would effectively allow 30-year auctions to be suspended for the next three years,” they wrote.

The report notes that the Treasury Department is already keeping an eye on it, as it is February Quarterly refund announcement said it is “monitoring SOMA Treasury purchases and growing private sector demand for Treasuries.”

The growth of stablecoins is slowing down

According to the report, Stablecoin growth has slowed in recent months due to weaker digital asset markets and adjustments following the introduction of the GENIUS Act last year.

Kendrick and Davies describe this pause as “cyclical rather than structural,” maintaining their longer-term $2 trillion market cap forecast.

The outlook builds on Kendrick’s previous estimate that about $500 billion in deposits could shift from banks to stablecoins by 2028.

Some market participants say the macro impact could be limited unless stablecoins reach significant scale.

“When stablecoins hold government bonds as reserves, the macro peg is not fundamentally different from stablecoins that hold fiat in the banking system – in both cases a large pool of private liquidity chooses some form of safe asset,” Kevin Lee, Gate Chief Business Officer, told me. Declutter.

“The impact on the yield curve and monetary conditions should be marginal unless the magnitude becomes truly substantial,” he added.

Lee said a market cap for stablecoins of $2 trillion, roughly 30% of the $6-7 trillion T-bill market, means that “even passive allocation of reserves could start to matter at the margin: Note yields, financing terms and the Treasury’s issuance mix could become more sensitive to reserve flows, especially during stress-induced redemptions.”

Nic Puckrin, Coin Bureau co-founder and chief market analyst, said Declutter the bigger concern is actually “liquidity concentration, especially if the stablecoin market does indeed rise to $2 trillion,” warning that issuers “could inadvertently increase market stress by buying Treasuries when liquidity is high and selling them in a low liquidity environment.”

Puckrin said redemptions mainly occur on exchanges, meaning issuers are not “under pressure to immediately liquidate assets,” and “buffers are in place” unless confidence in a stablecoin erodes.