U.S. Treasury may boost T-Bill issuance as stablecoins eye $2 trillion market cap: StanChart
TL;DR
Standard Chartered predicts stablecoin market cap will hit $2 trillion by 2028, creating up to $1 trillion in new T-bill demand. Combined with Fed buying, this could create a $900 billion supply gap, potentially leading Treasury to boost short-term bill issuance and pause 30-year auctions.
Key Takeaways
- •Standard Chartered forecasts stablecoin market cap reaching $2 trillion by 2028, generating $0.8-$1 trillion in new Treasury bill demand
- •Total new T-bill demand could reach $2.2 trillion through 2028, exceeding projected $1.3 trillion supply by about $900 billion
- •Treasury may increase bill issuance and potentially pause 30-year auctions to meet front-end demand from stablecoin issuers
- •Stablecoin issuers like Tether and Circle have become major T-bill buyers, channeling crypto capital into US government debt
- •The projected demand-supply gap gives Treasury scope to reallocate issuance from long-term bonds to short-term bills
What to know:
- Standard Chartered expects the stablecoin market cap to reach $2 trillion by the end of 2028, generating up to $1 trillion in fresh Treasury bill demand.
- Combined with roughly $1.2 trillion in projected Fed buying, total new T-bill demand could reach about $2.2 trillion through 2028, compared with around $1.3 trillion in supply, leaving a potential gap of roughly $900 billion.
- The bank said the Treasury could boost bill issuance, potentially pausing 30-year auctions, to meet rising demand at the front end.
- Standard Chartered expects the stablecoin market cap to reach $2 trillion by the end of 2028, generating up to $1 trillion in fresh Treasury bill demand.
- Combined with roughly $1.2 trillion in projected Fed buying, total new T-bill demand could reach about $2.2 trillion through 2028, compared with around $1.3 trillion in supply, leaving a potential gap of roughly $900 billion.
- The bank said the Treasury could boost bill issuance, potentially pausing 30-year auctions, to meet rising demand at the front end.
Standard Chartered still expects the stablecoin market to reach $2 trillion by the end of 2028, which should translate into around $1 trillion in new Treasury bill demand, the bank said in a Monday report.
As of early 2026, the total stablecoin market capitalization is roughly $300-$320 billion.
"This will result in c. $0.8-$1.0 trillion of fresh demand for T-bills (for use as reserves) from stablecoin issuers over that period," wrote Geoff Kendrick, head of digital asset research, and U.S. rates strategist John Davies.
Combined with $1-$1.2 trillion in projected Federal Reserve buying, total new T-bill demand could hit about $2.2 trillion through 2028, the report said. That compares with roughly $1.3 trillion in net new supply if bills’ share of total debt remains unchanged, implying a potential shortfall of $0.9 trillion.
Stablecoin issuers such as Tether and Circle (CRCL) have become major buyers of short-term U.S. government debt, holding tens of billions of dollars in Treasury bills as reserves backing tokens such as USDT and USDC.
Tether alone has disclosed T-bill holdings that rival those of mid-sized sovereign investors, while Circle also keeps a significant share of its reserves in short-dated Treasuries via money market funds.
As the stablecoin market grows, issuers typically park new inflows into T-bills to earn yield while maintaining liquidity, effectively channeling crypto-driven capital into U.S. government financing and reinforcing demand at the front end of the yield curve.
The Treasury said in its February 4 Quarterly Refunding Announcement (QRA) that it “is monitoring SOMA purchases of Treasury bills and growing demand for Treasury bills from the private sector,” a trend Standard Chartered expects to intensify.
The analysts said the projected excess demand gives Treasury Secretary Scott Bessent scope to lift T-bills’ share of issuance. Raising that share by 2.5 percentage points over three years would create about $0.9 trillion in additional bill supply, offsetting the gap.
Reallocating that amount from longer-dated bonds could effectively suspend 30-year auctions for three years and ease upward pressure on long-term yields, according to the report.
While not its base case, the bank expects the 10-year yield to reach 4.6% by end-2026, as the analysts warned of rising risks of front-end scarcity.
Stablecoin growth has recently stalled just above $300 billion, up from $238 billion in April 2025, as crypto prices weakened and post-GENIUS Act issuance slowed. Bitcoin has fallen more than 50% from its $126,000 October 2025 peak, dampening trading-driven demand. Standard Chartered views these headwinds as cyclical and maintains that stablecoins could add nearly $1 trillion in incremental T-bill demand by 2028, reshaping U.S. rate markets.
Read more: Standard Chartered sees bitcoin sliding to $50,000, ether to $1,400 before recovery
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