Stablecoin Boom Could Reshape $2.2T Treasury Market by 2028

In a report authored by Geoff Kendrick, Global Head of Digital Assets Research, and John Davies, U.S. Rates Strategist, Standard Chartered projects stablecoin market capitalization will reach $2 trillion by the end of 2028, a dramatic rise from approximately $309 billion today. The core mechanism driving this forecast’s impact on traditional finance (TradFi) is the reserve model for major dollar-pegged stablecoins like USDT and USDC. These issuers predominantly hold short-dated U.S. government securities, specifically Treasury bills, to back their tokens. Consequently, Kendrick and Davies estimate the projected market cap growth alone will generate between $0.8 trillion and $1.0 trillion in new, incremental demand for T-bills.

This private-sector demand is not occurring in a vacuum. The analysts combine it with expected Federal Reserve purchases—$500 billion to $600 billion via Reserve Management Purchases and a similar amount from reinvesting maturing mortgage-backed securities. The aggregate result is a staggering projection of roughly $2.2 trillion in total new T-bill demand between now and 2028. “Our projections suggest USD 0.9tn of excess demand for T-bills if their share of outstanding debt is not increased – in other words, T-bills could become too scarce if no action is taken,” Kendrick and Davies wrote. This potential scarcity is the linchpin of their broader market impact thesis.

Faced with this projected $0.9 trillion excess demand, Standard Chartered’s analysts propose a direct solution for the U.S. Treasury: rebalance its debt issuance. “Shifting USD 0.9tn of T-bond supply to T-bills to cover the excess demand would effectively allow 30Y auctions to be suspended for the next three years,” they wrote. This scenario positions stablecoin issuers on track to become one of the largest structural buyers of short-term U.S. government debt within three years, capable of influencing the Treasury’s issuance strategy.

The report notes that the Treasury Department is already attentive to these shifting demand dynamics. Its February Quarterly Refunding Announcement explicitly stated it is “monitoring SOMA purchases of Treasury bills and growing demand for Treasury bills from the private sector.” While stablecoin growth has slowed recently due to weaker digital asset markets and regulatory adjustments like the GENIUS Act, Kendrick and Davies characterize this as a “cyclical rather than structural” pause, leaving their long-term $2 trillion market cap forecast intact. This outlook builds on Kendrick’s prior research estimating a $500 billion shift from bank deposits into stablecoins by 2028.

While the scale of Standard Chartered’s projections is significant, some market participants caution that the macro impact may be limited unless stablecoins achieve truly systemic scale. Kevin Lee, Chief Business Officer of crypto exchange Gate, told Decrypt that if stablecoins hold Treasuries as reserves, “the macro linkage is not fundamentally different from stablecoins holding fiat in the banking system—in both cases, a large pool of private liquidity is choosing a particular form of safe asset.” He added, “The impact on the yield curve and monetary conditions should be marginal unless the scale becomes truly substantial.”

However, Lee acknowledged that a $2 trillion stablecoin market—representing roughly 30% of the current $6–7 trillion T-bill market—changes the calculus. At that size, “even passive reserve allocation can start to matter at the margin: bill yields, funding conditions, and the Treasury’s issuance mix could become more sensitive to reserve flows, particularly during stress-driven redemptions.” This sensitivity points to a potential risk flagged by other analysts: liquidity concentration.

Nic Puckrin, co-founder of Coin Bureau and lead market analyst, identified this as the bigger concern. He warned that if the stablecoin market balloons to $2 trillion, issuers could “inadvertently amplify market stress by buying T-bills when liquidity is high and selling into a low-liquidity environment.” This pro-cyclical behavior could exacerbate volatility. Puckrin noted that redemption pressures are typically managed on exchanges, meaning issuers aren’t immediately forced to liquidate assets, and buffers exist unless a stablecoin’s credibility erodes. Nonetheless, the report underscores that the intersection of crypto and TradFi is creating new channels for market influence and potential fragility that regulators and participants are only beginning to monitor.