Stablecoin Growth Could Drive Up to $1T Demand for US T‑Bills by 2028
Standard Chartered forecasts that rapid stablecoin expansion could create $800 billion–$1 trillion in new demand for short-term U.S. Treasury bills by 2028 as the stablecoin market potentially grows to $2 trillion (from ~$160 billion in early 2025). Regulatory moves in the U.S. and EU (eg. MiCA and proposed U.S. stablecoin bills) are likely to force issuers to hold high-quality liquid assets as reserves — and T‑bills are the preferred instrument for liquidity and safety. Major issuers like Circle and Tether already hold large shares of reserves in Treasuries, and minting activity converts deposited dollars into qualifying assets, forming a direct pipeline into the Treasury market. Standard Chartered warns this concentrated, predictable demand could prompt the U.S. Treasury to shift issuance toward shorter maturities and possibly pause 30‑year auctions for up to three years, lowering short-term borrowing costs but pressuring long-duration yields and reallocations by pension funds and insurers. Risks include concentration and operational risk if a few issuers dominate T‑bill purchases, which could amplify volatility during stress. The projection’s realization depends on stablecoin adoption and firm regulatory reserve rules; without such rules, issuers may favor higher‑yield assets instead of T‑bills.
Neutral
The news is neutral overall for crypto markets but important for macro-linked trading. Positive aspects: mandated reserve backing in high-quality liquid assets (HQLA) would channel substantial private-sector capital into U.S. T‑bills, supporting short-term yields and creating a deep, predictable buyer base — which can reduce short-term interest-rate volatility and be bullish for dollar‑pegged stablecoins and money‑market instruments. Negative aspects / risks: concentration risk if a few issuers dominate T‑bill purchases could increase systemic risk and create spillover volatility in stress events; potential shift away from long-duration Treasuries could pressure yields on long-term bonds and alter allocations for institutional investors, producing cross‑market repricing. For traders: expect increased correlation between stablecoin flows and short-term Treasuries, potential compression of short-end yields, and episodic volatility tied to issuer confidence or regulatory news. In the short term, market reaction will hinge on regulatory milestones and issuance flows — positive when laws tighten reserve rules (clarity), negative if signs of reserve concentration or issuer stress emerge. Long term, if the scenario materializes, stablecoin-driven demand could structurally deepen the T‑bill market and influence the Treasury curve, affecting carry trades, funding costs for crypto firms, and strategies that rely on yield-curve positioning. Historical parallels: money‑market inflows (eg. post‑2008 liquidity programs) showed how large, predictable buyers can compress short yields but create risks when concentrated; similar dynamics may apply here.