Stablecoins Could Reach $2000 Billion By 2028

Stablecoins, these cryptos backed by real assets, could see their supply increase dramatically, reaching 2 trillion dollars by 2028, according to a recent analysis. 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 Rise of Stablecoins

At the time when Binance ends USDT in Europe, 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. 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, widespread adoption of stablecoins will accelerate.

Furthermore, the growth of stablecoins will lead to increased demand for U.S. Treasury bills. Analysts predict that 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.

Economic Implications and Risks for Dollar Hegemony

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.

Beyond economic implications, the rise of stablecoins could strengthen the position of the U.S. dollar, thereby supporting the “hegemony of the USD” in global trade. However, long-term risks exist, particularly if stablecoins diversify into other currencies or currency baskets, which could harm dollar dominance.

The rise of stablecoins, driven by favorable legislation, will transform the global economy, boosting demand for T-bills and consolidating dollar hegemony. However, the risks associated with diversification into other currencies could, in the long term, erode this dominance, thus redefining global financial dynamics.