Stablecoins Set to Scoop Up $1T in T-Bills by 2028: Standard Chartered

Core Viewpoint - Stablecoin issuers are projected to become significant buyers of short-term U.S. government debt, with market capitalization expected to reach $2 trillion by the end of 2028, up from approximately $309 billion today [1][5]. Group 1: Demand for U.S. Treasury Bills - The growth of stablecoins is anticipated to generate an incremental demand of approximately $0.8 trillion to $1.0 trillion for U.S. Treasury bills, as issuers will hold short-dated government securities as reserves [2]. - Total new demand for Treasury bills is estimated to be around $2.2 trillion between now and 2028, factoring in expected Federal Reserve purchases of $500 billion to $600 billion and reinvestment of maturing mortgage-backed securities [3]. - There is a projected excess demand of $0.9 trillion for Treasury bills if their share of outstanding debt is not increased, indicating a potential scarcity of T-bills if no action is taken [3]. Group 2: Adjustments in Treasury Supply - To address the imbalance in demand, one suggested approach is to increase T-bill issuance while reducing the supply of long-dated bonds, allowing for a suspension of 30-year auctions for the next three years [4]. - The Treasury is already monitoring the situation, as indicated in its February Quarterly Refunding Announcement, which noted the growing demand for Treasury bills from the private sector [5]. Group 3: Stablecoin Market Dynamics - Recent months have seen a slowdown in stablecoin growth due to weaker digital asset markets and adjustments following the passage of the GENIUS Act, although this is viewed as a cyclical pause rather than a structural change [5][6]. - The long-term forecast for stablecoin market capitalization remains at $2 trillion, with an estimated $500 billion in deposits potentially shifting from banks into stablecoins by 2028 [6]. - Some market participants suggest that the macroeconomic impact of stablecoins may be limited unless they achieve significant scale [6].