According to a new research note from Standard Chartered, stablecoin issuers are poised to become a major force in U.S. Treasury markets over the next four years, potentially absorbing as much as $1.6 trillion in T-bills.
Key Insights
Stablecoin Supply Boom:
Today’s stablecoin supply stands at $230 billion.
Under the anticipated passage of the GENIUS Act—a U.S. bill designed to clarify stablecoin regulation—supply could surge to $2 trillion by the end of 2028.
Impact on U.S. Treasury Markets:
Analysts project that the regulatory clarity provided by the GENIUS Act will drive stablecoin issuers to hold an increasing amount of U.S. Treasury bills.
This shift could translate into approximately $400 billion in new T-bill purchases annually.
Overall, stablecoin issuers may become the second-largest buyers of T-bills after money-market funds, which currently hold around $2.4 trillion in T-bills.
Regulatory and Operational Adjustments:
To meet regulatory requirements and maintain liquidity, stablecoin issuers are expected to adopt strategies similar to Circle’s approach. For instance, USD Coin currently holds 88% of its reserves in T-bills with an average duration of 12 days.
The GENIUS Act mandates that these reserves be held for 93 days or less.
Analyst Geoff Kendrick points out that stablecoin issuers would likely favor shorter-duration holdings, particularly around FOMC meetings, to avoid undue risk.
Long-Term Economic Implications:
The expected increase in stablecoin issuance and subsequent T-bill purchases is seen as a critical factor for bolstering long-term demand for U.S. dollars.
Standard Chartered’s projections suggest that the inflow could absorb most of the new T-bill issuance planned for the remainder of the current U.S. administration’s term.
Market Outlook
The research note underscores that the passage of the GENIUS Act could be a game changer, lending legitimacy to the stablecoin industry and significantly altering the landscape of U.S. Treasury holdings. As stablecoins become more entrenched in mainstream finance, their growing demand for T-bills may help shape the future of both digital assets and traditional financial instruments.
For Further Insights
To track daily metrics and monitor the evolving dynamics of the stablecoin market, investors can refer to the? cryptocurrency-daily-crypto API from Financial Modeling Prep, which provides real-time data on cryptocurrency market movements and valuation trends.
