Standard Chartered still expects the stablecoin market to reach $2 trillion by the end of 2028, which should translate into about $1 trillion in new demand for Treasuries, the bank said in a Monday report.
At the start of 2026, the total market capitalization of stablecoins was around $300-320 billion.
“This will result in approximately $0.8-1.0 trillion in new demand for Treasuries (to be used as reserves) from stablecoin issuers over this period,” wrote Geoff Kendrick, head of digital asset research and US rates strategist John Davies.
Combined with planned Federal Reserve purchases of between $1 trillion and $1.2 trillion, total demand for new Treasuries could reach about $2.2 trillion through 2028, the report said. This compares to about $1.3 trillion in net new supply if the 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 US government debt, holding tens of billions of dollars of Treasury bonds as reserves backed by tokens such as USDT and USDC.
Tether alone has disclosed Treasury holdings that rival those of mid-sized sovereign investors, while Circle also keeps a significant portion of its reserves in short-term Treasuries through money market funds.
As the stablecoin market grows, issuers typically place new flows into Treasuries to earn yield while maintaining liquidity, effectively channeling crypto capital into U.S. government funding and building demand at the front end of the yield curve.
Treasury said in its February 4 Quarterly Reimbursement Announcement (QRA) that it is “monitoring purchases of Treasury bills by SOMA and the growing demand for Treasury bills from the private sector,” a trend that Standard Chartered expects to intensify.
Analysts said the projected excess demand gives Treasury Secretary Scott Bessent room to increase the share of Treasury issuance. Increasing that share by 2.5 percentage points over three years would create about $0.9 trillion in additional bills, making up the gap.
According to the report, reallocating this amount from longer-term bonds could effectively suspend 30-year auctions for three years and ease upward pressure on long-term yields.
Although not its base case scenario, the bank expects the 10-year yield to reach 4.6% by the end of 2026, with analysts warning of growing risks of initial shortages.
Stablecoin growth recently stalled at just over $300 billion, down from $238 billion in April 2025, as cryptocurrency prices weakened and post-GENIUS Act issuance slowed. Bitcoin has fallen more than 50% from its October 2025 high of $126,000, dampening trading-related demand. Standard Chartered views these headwinds as cyclical and maintains that stablecoins could add nearly $1 trillion to incremental demand for Treasuries by 2028, reshaping U.S. rates markets.
Learn more: Standard Chartered sees bitcoin slip to $50,000 and ether to $1,400 before recovery
