Increased Demand for T-bills From Stablecoin Issuers Could Roil Federal Debt Market: Report

In a report summarized by Decrypt, the bank projects that the total value of dollar-backed stablecoins in circulation will grow from roughly $309 billion today to $2 trillion by the end of 2028. Because stablecoin issuers typically hold short-term U.S. Treasury bills as reserves to back their tokens, that expansion would translate into significant new demand for government debt.

Standard Chartered’s analysts estimate that growth in the stablecoin market alone would generate between $800 billion and $1 trillion in additional demand for Treasury bills over that period. When combined with expected Federal Reserve purchases of Treasury bills and reinvestments of maturing mortgage-backed securities, total new demand could reach about $2.2 trillion by 2028.

The bank argues that this would create roughly $900 billion in excess demand for Treasury bills if the government does not increase their share of total outstanding debt. In practical terms, that means there may not be enough short-term debt available to satisfy buyers.

To address that imbalance, the analysts suggest the Treasury could increase issuance of short-term bills while reducing the supply of long-term bonds. Shifting about $900 billion from long-dated bonds into Treasury bills, they write, could effectively allow the government to suspend auctions of 30-year bonds for the next three years.

The Treasury Department appears aware of the trend. In its February Quarterly Refunding Announcement, the department said it is “monitoring” purchases of Treasury bills by the Federal Reserve and the growing demand from private-sector buyers.

Related: Stablecoins Could Siphon $500 Billion from Traditional Banks by 2028: Analyst

The forecast comes at a time when stablecoin growth has slowed. According to the report, recent months have seen weaker digital asset markets and adjustments following passage of the GENIUS Act last year. Standard Chartered characterizes the slowdown as cyclical rather than structural, maintaining its $2 trillion market capitalization projection for 2028.

The bank has also previously estimated that as much as $500 billion could move out of traditional bank deposits into stablecoins by 2028. That shift would further reinforce stablecoins’ role as large holders of short-term government debt.

Other market participants urge caution about the broader economic implications. Kevin Lee, chief business officer of Gate, told Decrypt that stablecoins holding Treasury bills is not fundamentally different from stablecoins holding fiat currency in banks. In both cases, he said, private investors are choosing a form of low-risk asset. He added that the impact on borrowing costs and broader monetary conditions should be limited unless the market becomes much larger.

Lee noted, however, that at a $2 trillion market size, stablecoins would represent roughly 30% of the $6 trillion to $7 trillion Treasury bill market. At that scale, even routine reserve allocation could begin to influence bill yields, funding conditions and the government’s debt issuance mix, particularly during periods of stress-driven redemptions.

Nic Puckrin, co-founder of Coin Bureau, raised a different concern: liquidity concentration. If stablecoins grow rapidly, he warned, issuers could unintentionally amplify market swings by buying Treasury bills when liquidity is abundant and selling when liquidity is thin. Still, he said that most redemptions occur on exchanges and that issuers are not typically forced to liquidate assets immediately, suggesting built-in buffers unless confidence in a stablecoin deteriorates.

Taken together, the forecast underscores how the rapid growth of digital dollar tokens could intersect with federal debt management. While the projected demand surge could ease financing pressures in the near term, it also raises questions about concentration risk, market sensitivity and the evolving relationship between crypto markets and U.S. government borrowing.