Stablecoin Supply Set to Skyrocket to $2 Trillion by 2028, Standard Chartered Says

A new report from Standard Chartered forecasts a dramatic surge in the total supply of stablecoins — from $230 billion today to $2 trillion by the end of 2028

Standard Chartered's new report has some interesting claims about stablecoins reaching $2 trillion by 2028 and huge T-bill demand. However, the report itself is behind a paywall, making it difficult to verify the accuracy and completeness of the information presented.

It's important to approach such reports critically and cross-reference the data with other reliable sources to form an informed opinion. Additionally, considering the broader economic and regulatory context is crucial for understanding the implications of such a massive stablecoin market expansion.

Here's a summary of the key takeaways from the report:

* Standard Chartered forecasts a dramatic surge in the total supply of stablecoins—from $230 billion today to $2 trillion by the end of 2028.

* The report attributes this surge to the U.S. Congress's move to formally set rules for the digital dollar sector.

* The report mentions that the "Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act" could be signed into law this summer.

* The legislation recently passed the Senate Banking Committee and is expected to usher in a new era of legal clarity and institutional legitimacy for the stablecoin industry.

* Standard Chartered estimates that stablecoin issuers would need to purchase around $1.6 trillion in T-bills over the next four years—roughly $400 billion annually.

* The industry could well account for the largest buying flow of any sector across all U.S. Treasuries.

* Only foreign buyers have matched this scale post-COVID, and even then, it was more diversified across T-bills, notes, and bonds.

* Such demand could play a pivotal role in supporting the U.S. government’s borrowing capacity, especially during President Donald Trump’s second term, should the estimated issuance volumes hold true.

* With the GENIUS Act requiring reserve holdings to have a duration of 93 days or less, analysts expect stablecoin issuers to follow Circle’s reserve approach as the template.

* Circle currently holds 88% of its USDC reserves in short-term U.S. government bonds, averaging a 12-day duration.

* Given that stablecoin issuers would likely prefer to avoid risk around the time of FOMC meetings, we see Circle’s shorter-duration holdings as a good indication of what the industry will adopt going forward.

* If adopted industry-wide, that model would push total stablecoin-related T-bill holdings to $1.75 trillion by 2028, up from just $150 billion today.

Overall, Standard Chartered's report provides a glimpse into the potential expansion of the stablecoin market and its implications for the U.S. Treasury market. However, it's crucial to approach these figures with caution and consider the broader economic context to fully evaluate the report's claims.