Stablecoins Could See Their Supply Increase Dramatically, Reaching 2 Trillion Dollars by 2028

Currently valued at about 230 billion dollars, this market could thus be multiplied tenfold in the coming years, driven by imminent legislation in the United States.

A recent analysis predicts that the supply of stablecoins, cryptocurrencies backed by real assets, could see a dramatic increase, reaching 2 trillion dollars by 2028. Currently valued at about 230 billion dollars, this market could thus be multiplied tenfold in the coming years, driven by imminent legislation in the United States.

The "Guiding and Establishing National Innovation for U.S. Stablecoins" (GENIUS Act) bill, recently adopted by the U.S. Senate banking committee, is expected to come into effect this summer, setting the stage for a groundbreaking shift in the crypto landscape. This legislation should formalize the regulatory framework for stablecoins, thereby bringing legitimacy and security to the sector. According to Geoffrey Kendrick, global head of crypto asset research at Standard Chartered, this move will foster widespread adoption of stablecoins.

Furthermore, the growth of stablecoins will lead to increased demand for U.S. Treasury bills. According to the analysis, the sector will need to purchase 1.6 trillion dollars in T-bills over the next four years, a volume sufficient to absorb the entire issuance of bills planned during Donald Trump’s second term. This situation could make stablecoins one of the largest drivers of demand for U.S. Treasury securities.

In addition, the reserve model of Circle, used to back the stablecoin USDC, could become the industry standard for crypto. This model, which relies on short-term U.S. government bonds, is expected to see the industry accumulate nearly 1.75 trillion dollars in Treasury bills by 2028.

The economic implications are significant, especially in the context of the U.S. dollar hegemony. The rise of stablecoins could ultimately strengthen the position of the greenback, supporting it in global trade. However, long-term risks exist, particularly if stablecoins diversify into other currencies or currency baskets, which could harm dollar dominance.

Overall, the rise of stablecoins, fueled by pending legislation and increasing demand, will reshape the global economic landscape. It will boost demand for T-bills, consolidating dollar hegemony in the short term. But the potential for diversification into other currencies poses long-term risks to this dominance, setting the stage for a redefinition of global financial dynamics.