Stablecoin issuers are projected to become major buyers of short-term U.S. government debt within three years. Standard Chartered analysts predict the stablecoin market cap will surge to $2 trillion by the end of 2028, a significant increase from its current $309 billion.
This expansion is expected to create $800 billion to $1 trillion in new demand for U.S. Treasury bills. Factoring in Federal Reserve purchases and reinvestments, total new Treasury bill demand could reach approximately $2.2 trillion by 2028.
Analysts warn this could lead to an excess demand of $900 billion for Treasury bills. This imbalance might allow the U.S. Treasury to suspend 30-year bond auctions for up to three years by shifting supply to Treasury bills. The Treasury has acknowledged this growing private sector demand for bills.
While stablecoin growth has recently slowed, analysts view this as a temporary pause, maintaining their long-term forecast. The increasing scale of stablecoins, even with passive reserve allocation, could influence bill yields and the Treasury's issuance strategy.