Standard Chartered: Stablecoin Issuers to Swallow Up the U.S. Treasury Market

▲ Tether (USDT), Stablecoin, U.S. Dollar (USD)/AI-generated image

Stablecoin issuers have rapidly emerged as key buyers of U.S. Treasury securities. Analysts suggest this shift could fundamentally reshape the U.S. government’s debt management strategy and the structure of the bond market.

According to crypto-focused media outlet BeInCrypto on February 23 (local time), Geoffrey Kendrick, an analyst at Standard Chartered, stated in a report that the growth of the stablecoin market will significantly drive demand for U.S. Treasuries. The bank projects that stablecoin issuers will generate between $800 billion and $1 trillion in new demand for short-term Treasury bills by the end of 2028. Including purchases by the Federal Reserve, total demand for short-term Treasuries could approach $2.2 trillion.

Kendrick highlighted strong stablecoin demand in emerging markets. The report noted, “Two-thirds of the expected demand for short-term Treasuries is likely to originate from emerging markets,” adding that “unlike developed markets, where existing assets are replaced, emerging markets could bring entirely new capital inflows.” Such substantial demand could serve as a decisive rationale for the U.S. Treasury to restructure national debt by reducing long-term bond issuance and increasing short-term Treasury supply. There is even speculation that the Treasury could suspend 30-year bond auctions entirely over the next three years.

U.S. Treasury Secretary Scott Bessent is also expected to leverage these market dynamics to increase the proportion of short-term Treasuries within the overall debt portfolio. Raising the share of short-term Treasuries by just 2.5% over three years would result in approximately $900 billion in additional supply. This could offset surging demand from stablecoin issuers while helping maintain stable yields on 10-year Treasuries. Historically, short-term Treasuries have accounted for 26.1% of total marketable debt, exceeding the advisory committee’s recommended range of 15–20%, suggesting there is sufficient room for expansion.

Currently, the stablecoin market capitalization stands at around $304 billion, constrained by temporary stagnation in the broader crypto market and regulatory delays following the implementation of the U.S. crypto market structure bill (GENIUS). However, Standard Chartered views this trend as cyclical rather than structural and forecasts that the stablecoin market cap could reach $2 trillion by the end of 2028. Major assets such as Tether (USDT) are expected to firmly establish themselves as core pillars supporting liquidity in the U.S. Treasury market.

Despite continued volatility across the broader digital asset market, including Bitcoin (BTC), stablecoins are expanding the influence of the digital dollar worldwide and accelerating integration with the traditional financial system. Should the unprecedented scenario of halting 30-year Treasury issuance become reality, it would mark a historic restructuring of financial markets beyond the 2002–2006 precedent. Investors are closely monitoring potential changes to the Treasury yield curve and America’s evolving debt financing strategy driven by stablecoins.

Disclaimer: This article is for informational purposes only and should not be construed as investment advice. The publisher is not responsible for any investment losses incurred based on this content.