- The global stablecoin market could surge nearly tenfold to $2 trillion by the end of 2028.
- The massive growth will be driven by possible stablecoin legislation in the US.
- The report adds that rising stablecoin reserves would increase demand for the US dollar.
The global stablecoin market could surge nearly tenfold to $2 trillion by the end of 2028, driven by anticipated US regulatory clarity, according to a new report from Standard Chartered.
The bank’s analysts, led by Geoffrey Kendrick, projected that forthcoming legislation would legitimize the asset class, triggering accelerated adoption and cementing the US dollar’s role at the heart of global digital finance.
The legislation in question, the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, cleared the Senate Banking Committee last month and is expected to become law this summer.
Standard Chartered argues the bill would formalize operational standards and reserve requirements for stablecoin issuers, leading to dramatic growth in total market supply from the current $230 billion to $2 trillion within four years.
Implications for the US treasuries and dollar hegemony
Such expansion would have significant implications for the US Treasury market.
The analysts estimate stablecoin issuers would need to purchase $1.6 trillion worth of short-dated Treasury bills by 2028 to meet reserve requirements, accounting for a sizable share of demand for new T-bill issuance during President Donald Trump’s second term.
“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, the report stated.
The GENIUS Act mandates stablecoin reserves be held in assets with maturities of 93 days or less, effectively channeling capital into the T-bill market.
Standard Chartered noted Circle’s reserve model — with 88% of USDC reserves in government bonds averaging 12-day maturities — is likely to become the sector standard once regulation is enacted.
The dollar strengthened in the medium term
The report adds that rising stablecoin reserves would increase demand for the US dollar and reinforce dollar dominance in trade and cross-border payments.
“The holy grail of international finance is finding an alternative to the USD that offers the same flexibility and liquidity as the USD,” the report added.
For now, rapid innovation in USD-backed stablecoins will only deepen the dollar’s entrenchment, as per Kendrick.
However, the analysts cautioned that longer-term risks to dollar hegemony could emerge if stablecoin development migrates to multi-currency or non-dollar-pegged tokens.
While attempts like the IMF’s Special Drawing Rights basket failed to achieve global acceptance, a sufficiently liquid, diversified digital currency basket could attract central banks and sovereign wealth funds if digital asset reserves gain institutional legitimacy.
For now, Standard Chartered sees US regulatory progress as a catalyst for one of the largest structural shifts in global liquidity flows, with stablecoins poised to become one of the dominant vehicles for digital payments and financial reserves.
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