Investing.com – Stablecoin issuers are poised to become a major force in U.S. Treasury markets, potentially absorbing as much as $1.6 trillion in T-bills over the next four years, according to a new research note from Standard Chartered.
The bank says the expected passage of the GENIUS Act, a U.S. bill that clarifies stablecoin regulation, could drive total stablecoin supply from $230 billion today to $2 trillion by the end of 2028.
This expected growth has significant implications for Treasury markets and long-term demand for U.S. dollars, according to analyst Geoff Kendrick.
"The GENIUS Act, which was cleared by the Senate Banking Committee in March, paves the way for passage by Congress and presidential sign-off by the summer," the note states. “U.S. legislation on stablecoins would further legitimise the stablecoin industry.”
To meet regulatory requirements and maintain liquidity, stablecoin issuers are expected to mirror Circle’s approach, with the fintech behind USD Coin currently holding 88% of its reserves in T-bills with an average duration of 12 days. The GENIUS Act mandates holdings of 93 days or less.
“Given that stablecoin issuers would likely prefer to avoid risk around the time of FOMC meetings, we see Circle’s shorter-duration holdings as a good indication of what the industry will adopt going forward,” Kendrick wrote.
StanChart estimates that the projected rise in issuance would translate into $400 billion in new T-bill purchases annually through 2028.
“This would be enough to absorb all of the fresh T-bill issuance planned for the rest of Trump’s second term,” the analysts wrote. Only money-market funds, which currently hold $2.4 trillion in T-bills, would remain a larger buyer.
Beyond Treasury demand, the expansion of USD-pegged stablecoins would reinforce the U.S. dollar’s role in the digital asset ecosystem.
“Rising demand for USD-denominated stablecoin reserves would create additional demand for USD,” StanChart notes, adding that this would “support USD hegemony” and provide a medium-term offset to the pressures facing the dollar from rising tariff tensions.