Stablecoin legislation could fuel an explosion in the supply of the cryptocurrencies whose value is pegged to an external asset, spurring demand for U.S. Treasurys and helping support the dominance of the U.S. dollar, according to analysts at Standard Chartered. Stablecoin assets – most of which are backed by Treasury bills – could grow to $2 trillion by the end of 2028 if President Donald Trump signs legislation this summer clarifying U.S. regulations, Geoff Kendrick, a London-based analyst at the bank, said in a note this week, up from $230 billion today. That could generate $1.6 trillion of new demand for Treasury bills – securities maturing in a year or less — which issuers of stablecoins would buy for their reserves and would absorb all new bill issuance planned for President Donald Trump’s second term, according to Kendrick. “Rising demand for USD-denominated stablecoin reserves would create additional demand for USD,” the said, referring to the U.S. dollar. “It should further entrench USD dominance of stablecoins, which is likely to be sticky given strong network effects in digital assets. As stablecoin usage increases, this additional source of USD demand should support USD hegemony, acting as a medium-term offset against the current threat to USD hegemony on the back of tariff concerns.” Unlike bitcoin and other cryptocurrencies , stablecoins are designed to have a stable value against a non-crypto asset, usually the U.S. dollar. Their market cap has grown about 11% this year and about 47% in the past year, dominated primarily by Tether and USD Coin . Typically, they’re used for trading and as collateral in decentralized finance (DeFi), and stablecoins are closely watched for evidence of demand, liquidity and activity in the market. Trading volume in stablecoins has increased this year as the industry grows increasingly confident that the crypto market will soon see its first piece of U.S. legislation passed, focusing on stablecoins. The GENIUS Act was cleared by the Senate Banking Committee in March, while the STABLE Act cleared the House Financial Services Committee earlier this month. Both clarify regulations governing stablecoins. “Our estimate that the stablecoin industry will need to buy USD 1.6 [trillion] of T-bills over the next four years (USD 400bn a year) suggests that the industry could well account for the largest buying flow of any sector across all U.S. Treasuries,” Kendrick wrote in a 9-page report out last Tuesday. “Based on the post-Covid trends of the past four years, the only similar-sized demand was from foreign buyers, but this was spread across T-bills, notes and bonds.” Unlike shorter term bills, Treasury notes and bonds have maturities ranging from two- to 30 years . A rise in stablecoin reserves would also boost demand for U.S. dollars, Kendrick said, supporting its position as the leading global currency for payments, despite rising trade tensions that have recently served to weaken the greenback’s value and suggested risks to its global preeminence. “Given the USD’s starting role as the main currency in international transactions, if stablecoins make the USD even easier to use, demand for USD assets to back stablecoins is likely to increase,” Kendrick said. “The holy grail of international finance is finding an alternative to the USD that offers the same flexibility and liquidity as the USD,” he added. “On the face of it, stablecoin development could initially increase the attractiveness of USD assets if innovation were concentrated in USD stablecoins. The strength of network effects in digital assets suggests that USD dominance, once cemented further, will be difficult to usurp.” —CNBC’s Michael Bloom contributed reporting. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
