- US stablecoin legislation is expected soon, with the GENIUS Act likely to be passed by the summer
- Standard Chartered analysts think this will help total stablecoin supply increase from $230 billion today to $2 trillion by end-2028
- Stablecoins require reserves; they see this supply growth generating $1.6 trillion of new US T-bill demand
- That level of demand is enough to absorb all new T-bill issuance planned during Trump’s second term
- USD dominance in stablecoin supply should further extend USD hegemony
In a recent report, Standard Chartered analysts explained why stablecoin issuers are set to become the largest T-bill buyers.
The GENIUS Act, which clarifies US regulations on stablecoins, was cleared by the Senate Banking Committee in March; this paves the way for passage by Congress and presidential sign-off by the summer. US legislation on stablecoins – digital assets that are typically pegged to a fiat currency like the USD and designed to reduce price volatility and facilitate transactions – would further legitimize the stablecoin industry.
“We estimate that this would cause total stablecoin supply to rise from USD 230bn today to USD 2tn by end-2028. This has implications for both US Treasury buying (for reserve purposes) and USD hegemony,” analysts wrote. For USTs, they think the industry will migrate to the model used by Circle (the fintech company that created and manages the USDC stablecoin) for its reserves backing USDC – 88% of its reserves are in T-bills with an average duration of 12 days.
“Our estimated increase in stablecoin issuance (to a total of USD 2tn) would require extra purchases of USD 1.6tn of T-bills over the next four years, or USD 400bn a year. Assuming that T-bills’ share of total UST supply remains unchanged, this would be enough to absorb all of the fresh T-bill issuance planned for the rest of Trump’s second term. In terms of supply held, only money-market funds (which currently hold USD 2.4tn of the total USD 6.4tn of T-bills outstanding) would remain larger holders,” according to the report.