Stablecoin Market Set to Explode to $2 Trillion
Standard Chartered Bank predicts a dramatic expansion of the stablecoin market, estimating it could grow tenfold to $2 trillion within the next three years. This surge is anticipated following the potential passage of new U.S. legislation aimed at establishing a regulatory framework for cryptocurrencies. The report highlights that stablecoin issuers may need to hold an additional $1.6 trillion in short-term Treasuries to support this growth.
Legislative Changes Driving Growth
The expected U.S. legislation on stablecoins, known as the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), aims to create a comprehensive regulatory environment for these digital assets. Stablecoins are typically pegged to fiat currencies like the U.S. dollar, designed to minimize price volatility and facilitate transactions. According to Geoff Kendrick, Standard Chartered’s global head of digital assets research, such regulation would further legitimize the stablecoin industry, potentially impacting U.S. Treasury purchases and reinforcing the dollar’s global dominance.
The GENIUS Act, introduced in early 2025, has already passed a Senate committee vote and is progressing toward becoming law. Endorsed by former President Donald Trump, the legislation is seen as a crucial step in solidifying the future of stablecoins in the U.S. market. Analysts suggest that the additional demand for dollar-denominated assets, such as Treasury bills, could provide a much-needed boost to the U.S. government debt market, which has faced turbulence due to recent trade tariffs imposed by the Trump administration.
Impact on U.S. Treasury Market
Standard Chartered’s report indicates that the anticipated growth in the stablecoin market would necessitate stablecoin issuers to hold a significant amount of U.S. Treasury bills. Specifically, the bank estimates that this could absorb all planned T-bill issuances for the remainder of Trump’s second term, assuming the share of T-bills in total U.S. Treasury supply remains constant. Currently, money-market funds hold approximately $2.4 trillion of the total $6.4 trillion in outstanding T-bills, making them the only larger holders compared to stablecoin issuers.
Tether Holdings SA, the issuer of the largest stablecoin, USDT, is already one of the major holders of U.S. Treasury bills. The company reported earnings of $13 billion last year from the interest accrued on the bonds that constitute its reserves. The increasing demand for Treasuries is expected to serve as a medium-term counterbalance to concerns regarding the dollar’s dominance, particularly in light of the risks associated with inflation and international selling of U.S. debt.
Future of Bitcoin and Stablecoins
Standard Chartered is also optimistic about Bitcoin’s future, forecasting that its price could reach $500,000 by the end of 2028. As of Tuesday, Bitcoin was trading at approximately $84,000. The bank’s bullish outlook reflects its commitment to the cryptocurrency sector, positioning itself as one of the most crypto-focused mainstream banking institutions.
In a related development, President Trump’s crypto initiative, World Liberty Financial, plans to launch a new stablecoin called USD1, which will be fully backed by short-term U.S. Treasuries, dollar deposits, and other cash equivalents. This move underscores the growing intersection of traditional finance and the burgeoning cryptocurrency market, as regulatory frameworks evolve to accommodate these digital assets.
Observer Voice is the one stop site for National, International news, Sports, Editor’s Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.
