Stablecoin issuers are on track to become some of the biggest buyers of short‑term U.S. government debt within just a few years, according to a new analysis from international banking group Standard Chartered.
In their report, Geoff Kendrick, Global Head of Digital Assets Research, and John Davies, U.S. Rates Strategist at the bank, argue that the stablecoin sector is poised for explosive growth despite the recent slowdown in expansion. They forecast that the total market capitalization of stablecoins could surge to around $2 trillion by the end of 2028. For comparison, the market currently sits at roughly $309 billion based on recent data, meaning the sector would more than sextuple in size if the projection plays out.
This kind of growth, the analysts say, would have direct and substantial implications for the U.S. Treasury market. Because most major stablecoins are backed by highly liquid, low‑risk assets-primarily short‑dated U.S. government securities-an expanding stablecoin supply inevitably translates into additional demand for T‑bills and other short‑term Treasuries.
Kendrick and Davies estimate that the projected growth in stablecoins alone would create roughly $0.8 trillion to $1.0 trillion in extra demand for U.S. Treasury bills over the next few years. That demand comes from the need of stablecoin issuers to hold safe reserves that match or exceed the value of their tokens in circulation, ensuring that users can always redeem their coins for dollars at par.
Standard Chartered’s analysis does not look at this demand in isolation. The bank also factors in expected Federal Reserve activity, including additional Treasury purchases in the range of $500 billion to $600 billion through its Reserve Management Purchases programs and related operations. When combined with the appetite from stablecoin issuers, this creates what the bank describes as a significant “excess demand” for T‑bills.
Overall, Standard Chartered sees around $0.9 trillion of net excess demand for short‑term U.S. government paper in the coming years. In practical terms, that means there will likely be more natural buyers for T‑bills than the government needs to satisfy its short‑term funding requirements, all else equal.
One knock‑on effect of this imbalance, the bank suggests, is on the structure of U.S. government borrowing. If investor demand is heavily concentrated at the short end of the curve, the U.S. Treasury may find it easier and cheaper to issue more T‑bills while trimming the volume of long‑dated bonds, such as 30‑year Treasuries. Standard Chartered notes that this dynamic increases the odds that authorities could reduce the frequency or size of 30‑year bond auctions over time.
For the U.S. government, the rise of stablecoins therefore represents an unexpected but powerful source of demand for its safest debt instruments. Stablecoin issuers, in effect, act like large money‑market funds: they collect dollars from users, invest them in short‑term government securities, and pass on the benefits in the form of a digital dollar token that can move around blockchain networks.
From the perspective of stablecoin companies, T‑bills are attractive for several reasons. They are considered virtually risk‑free in credit terms, highly liquid, easy to value, and widely accepted as top‑tier collateral. At today’s interest‑rate levels, they also generate meaningful yield, which can be captured by the issuer as profit or, in some newer models, partially shared with users through yield‑bearing stablecoins.
For crypto markets, this projected expansion to $2 trillion in stablecoin capitalization would be transformational. Stablecoins already function as the primary quote and settlement currency for trading on many digital asset platforms. A larger supply would deepen liquidity, reduce slippage for large orders, and potentially make crypto markets more resilient during bouts of volatility.
However, the Standard Chartered report also implicitly raises important regulatory and systemic questions. If stablecoin issuers become one of the largest structural buyers of short‑term U.S. government debt, the health of the Treasury market and the stability of major stablecoins become even more intertwined. A disruption in one could increasingly spill over into the other.
Regulators have been paying growing attention to this link. Large dollar‑pegged stablecoins are backed in significant part by U.S. T‑bills, meaning they rely on the continuous functioning of that market to preserve their peg. Conversely, if a major stablecoin experienced a loss of confidence and a wave of redemptions, it could be forced to liquidate large quantities of short‑term Treasuries quickly, potentially adding stress to money markets-though the sheer depth of the Treasury market provides a substantial buffer.
Standard Chartered’s numbers also underline why policymakers in the U.S. and abroad are increasingly focused on setting clear rules for stablecoins. As the sector moves from hundreds of billions to potentially trillions in value, questions about reserve quality, transparency, auditing, and redemption rights take on macro‑level significance rather than being confined to the crypto industry alone.
The report’s projection comes despite signs that stablecoin growth has moderated compared to the boom years earlier in the decade. After rapid expansion fueled by speculative crypto cycles, leverage, and arbitrage opportunities, the market has seen periods of stagnation and even contraction. Yet, the bank’s analysts argue that the structural drivers-payments, trading, remittances, on‑chain finance, and integration with traditional financial rails-remain intact and are likely to reassert themselves as regulatory clarity improves.
One important growth vector is the use of stablecoins for cross‑border payments and remittances. By allowing near‑instant settlement across different jurisdictions with low fees, stablecoins can undercut traditional correspondent banking networks, especially for smaller transactions. As more fintech firms, payment processors, and even banks begin to plug into stablecoin infrastructure, underlying demand for tokenized dollars may accelerate.
Another emerging catalyst is the rise of tokenized real‑world assets and on‑chain capital markets. As bonds, money‑market instruments, and other traditional securities migrate onto blockchains, stablecoins naturally become the native cash leg of these transactions. This further reinforces their role as the digital equivalent of cash and short‑term government debt in a new, programmable financial architecture.
Standard Chartered’s analysis also hints at potential competition between different types of “digital dollars.” Alongside private stablecoins, central banks are exploring central bank digital currencies (CBDCs), and tokenized bank deposits are beginning to appear. How these instruments coexist, complement, or crowd one another out will influence whether the stablecoin market truly reaches the projected $2 trillion.
If the forecast is even approximately correct, the relationship between crypto and traditional finance will look very different by 2028. Stablecoins-once seen primarily as plumbing for trading volatile tokens-would be recognized as a major institutional channel through which global savings are recycled into U.S. government debt. The U.S. Treasury, for its part, would be indirectly tapping into worldwide crypto demand to help finance the state at the short end of the curve.
At the same time, the concentration of reserves in U.S. assets raises strategic questions for other countries. If dollar‑denominated stablecoins continue to dominate, global users seeking digital cash will be, in effect, reinforcing demand for U.S. T‑bills and the dollar system more broadly. Some jurisdictions may respond by supporting their own fiat‑backed stablecoins or accelerating CBDC projects to ensure monetary sovereignty in a world where money increasingly moves on public blockchains.
In summary, Standard Chartered’s report portrays stablecoins not just as a crypto product, but as a new and rapidly growing class of structural investors in U.S. short‑term government debt. With market capitalization projected to climb from about $309 billion today to around $2 trillion by 2028, issuers could add $0.8 trillion to $1.0 trillion in incremental demand for T‑bills. Combined with expected Federal Reserve purchases, this creates roughly $0.9 trillion of excess demand at the short end of the curve and increases the likelihood that the U.S. will rely relatively less on long‑dated bond issuance, including 30‑year Treasuries.
How this plays out will depend heavily on regulation, market structure, and the broader macroeconomic environment. But if the trajectory holds, the next few years could firmly cement stablecoins as a central bridge between digital assets and the core of the global financial system.