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 demand for Treasury bills, the bank said in a report on Monday.
As of early 2026, the total market capitalization of stablecoins is approximately $300 to $320 billion.
“This will result in between $0.8 and $1.0 trillion of new demand for Treasury bills (for use as reserves) from stablecoin issuers over that period,” wrote Geoff Kendrick, head of digital assets research and US rates strategist John Davies.
Combined with between $1 and $1.2 trillion in purchases projected by the Federal Reserve, total demand for new Treasury bills could reach about $2.2 trillion through 2028, according to the report. That compares with about $1.3 trillion in net new supply if the banknotes’ share of total debt remains unchanged, implying a potential shortfall of $0.9 trillion.
Stablecoin issuers like Tether and Circle (CRCL) have become major short-term buyers of US government debt, holding tens of billions of dollars in Treasury bills as reserves backing tokens like USDT and USDC.
Tether alone has disclosed holdings of Treasury bills that rival those of mid-sized sovereign investors, while Circle also maintains a significant portion of its reserves in short-term Treasuries through money market funds.
As the stablecoin market grows, issuers typically deposit new inflows into Treasury bills to earn yield while maintaining liquidity, effectively channeling cryptocurrency-driven capital into funding the U.S. government and bolstering demand at the front end of the yield curve.
The Treasury said in its Quarterly Reimbursement Announcement (QRA) on February 4 that it “is monitoring purchases of Treasury bills by SOMA and the growing demand for Treasury bills by 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 ratio of Treasury bill issuance. Increasing that ratio by 2.5 percentage points over three years would create about $0.9 trillion in additional bill supply, making up the gap.
According to the report, reallocating that amount of longer-term bonds could effectively suspend 30-year auctions for three years and alleviate upward pressure on long-term yields.
While not its base case, the bank expects the 10-year yield to reach 4.6% by the end of 2026, as analysts warned of growing risks of initial shortages.
Stablecoin growth has recently stalled just above $300 billion, down from $238 billion in April 2025, as cryptocurrency prices weakened and the issuance of the GENIUS Act slowed. Bitcoin has fallen more than 50% from its October 2025 peak of $126,000, dampening trading-driven demand. Standard Chartered views these headwinds as cyclical and maintains that stablecoins could add nearly $1 trillion in incremental demand for Treasury bills by 2028, reshaping US rates markets.
Read more: Standard Chartered sees bitcoin falling to $50,000 and ether to $1,400 before recovery
