Stablecoins Double to $280B, Stir Debate on Treasury Liquidity

The stablecoin market has nearly doubled in size over the past year, reaching $280 billion as issuers back tokens with short-term U.S. Treasuries. This trend ties crypto liquidity more directly to Federal Reserve policy than ever before. Coinbase analysts predict stablecoin supply could swell to $1.2 trillion by 2028, necessitating $5.3 billion of new Treasury purchases each week and potentially exerting downward pressure on yields. However, sudden redemptions risk triggering forced selling of bills, draining market liquidity. OKX Singapore CEO Gracie Lin argues that stablecoins have built robust payment rails but now require a unified market to boost efficiency, liquidity and utility. On Goldman Sachs’ Exchanges podcast, UC Berkeley economist Barry Eichengreen warned of a possible 2008-style liquidity crunch if confidence in stablecoins falters. Former U.S. Comptroller Brian Brooks countered that the GENIUS Act’s requirement for one-to-one Treasury backing mirrors historic banking reforms and strengthens dollar demand by ensuring each token is fully collateralized. The debate highlights a macroeconomic dilemma: stablecoins may shave basis points off Treasury yields and act as a new engine of global dollar demand, or they could amplify shocks and strain markets during stress events. Traders should monitor regulatory developments and redemption patterns to gauge whether stablecoins will steady or destabilize liquidity in the months ahead.