Stablecoin Issuers to Dominate U.S. Treasury Market with $1.6 Trillion Investment

Stablecoin Issuers Poised to Reshape U.S. Treasury Markets

Stablecoin issuers are set to become a dominant force in U.S. Treasury markets, with potential investments reaching $1.6 trillion in T-bills over the next four years. This surge is anticipated following the expected passage of the GENIUS Act, a U.S. bill aimed at clarifying stablecoin regulation. The legislation is projected to expand the stablecoin market from $230 billion today to $2 trillion by 2028, according to a research note from Standard Chartered.

The GENIUS Act and Its Impact

The GENIUS Act, cleared by the Senate Banking Committee in March, is expected to be passed by Congress and signed into law by summer. This regulatory clarity is likely to legitimize the stablecoin industry, driving its growth. To comply with the Act's requirements, stablecoin issuers are expected to adopt strategies similar to Circle, which currently holds 88% of its reserves in T-bills with an average duration of 12 days. The Act mandates holdings of 93 days or less, favoring shorter-duration assets to minimize risk around Federal Open Market Committee (FOMC) meetings.

Projected T-Bill Purchases and Market Implications

Standard Chartered estimates that the growth in stablecoin issuance could result in $400 billion in new T-bill purchases annually through 2028. This would be sufficient to absorb all new T-bill issuance planned during Trump's second term. Only money-market funds, which currently hold $2.4 trillion in T-bills, would remain larger buyers. The expansion of USD-pegged stablecoins is also expected to reinforce the U.S. dollar's dominance in the digital asset ecosystem, creating additional demand for USD and offsetting pressures from rising tariff tensions.