Stablecoins could drive $1 trillion in T-bill demand, giving Treasury room to shift issuance: Standard Chartered

Stablecoin issuers are poised to become some of the largest buyers of U.S. Treasury bills, potentially reshaping how the U.S. government finances itself over the next several years, according to new research from Standard Chartered.

Analysts led by Geoffrey Kendrick, the bank’s global head of digital assets research, and John Davies, U.S. rates strategist at Standard Chartered, said they continue to expect stablecoin market capitalization to reach $2 trillion by the end of 2028.

The expansion would generate roughly $0.8 trillion to $1 trillion in fresh demand for T-bills as issuers accumulate short-term government debt as reserve assets. “Stablecoin issuers are becoming the biggest buyers of U.S. T-bills,” Kendrick and Davies wrote, adding that such demand could create approximately $0.9 trillion of excess appetite for bills over the next three years if issuance patterns remain unchanged.

T-bill demand to grow

Stablecoin supply currently stands near $300 billion, having slowed in recent months amid a downturn in crypto asset prices and the slower rollout of new regulated products following the July 2025 passage of the GENIUS Act. The bank views that pause as cyclical rather than structural.

Under the GENIUS Act framework, U.S.-regulated stablecoin issuers are required to hold high-quality liquid assets, with short-dated Treasurys playing a central role. Stablecoin-related demand is therefore expected to concentrate in the 0 to 3-month sector of the curve.

Standard Chartered estimates that two-thirds of the projected $2 trillion stablecoin market cap by 2028 will come from emerging markets, generating fresh T-bill demand, while growth in developed markets will partly replace existing Treasury allocations. Previously, The Block’s coverage cited Standard Chartered’s analysis, which said $1 trillion in bank deposits from emerging markets could be diverted into stablecoins.

The bank also recently trimmed its estimate of new bill demand to $0.8 to $1 trillion from prior projections, as experts increasingly point to mass stablecoin adoption. The Federal Reserve may add to that front-end pressure, Kendrick and Davies opined. The analysts estimate $500 to $600 billion in additional T-bill demand via the Fed’s Reserve Management Purchases and a similar amount from the replacement of maturing mortgage-backed securities holdings.

Together with stablecoin growth, total new bill demand could reach roughly $2.2 trillion through 2028. That compares with about $1.3 trillion in projected net T-bill supply over the same period if the share of bills within total outstanding debt remains constant, based on Congressional Budget Office estimates. The result, the bank argues, could be a $0.9 trillion shortfall — making T-bills scarce unless Treasury adjusts issuance.

Treasury Secretary Scott Bessent has recently signaled openness to shifting the composition of U.S. debt. In a February testimony, Bessent said the GENIUS Act could become “an important feature of financing the U.S. government,” while the Treasury’s latest Quarterly Refunding Announcement noted “growing demand for Treasury bills from the private sector.”

T-bills currently account for 21.7% of outstanding marketable debt, above the Treasury Borrowing Advisory Committee’s recommended 15% to 20% range but below the post-World War II average of 26.1%. Raising that share by just 2.5 percentage points over three years would generate roughly $0.9 trillion in additional bill issuance, offsetting the projected supply shortfall, according to Standard Chartered.

One way to do so would be to reduce long-dated note and bond issuance. Kendrick and Davies calculate that shifting $0.9 trillion from long-end supply into bills could, under current auction sizes, effectively allow suspension of 30-year bond auctions for three years. The U.S. Treasury previously paused 30-year issuance between 2002 and 2006, though that decision occurred during budget surpluses — a sharply different backdrop from today’s 5% to 6% deficit levels.

Estimated impact

The immediate market reaction to such a shift would likely be a bull flattening of the Treasury curve, the analysts said, as long-end yields fall relative to the front end.

Yet, that scenario is not the base case. Standard Chartered continues to expect a bear steepening over the next year, with the 10-year yield finishing 2026 near 4.6%. Still, they argue that investors should monitor the risk of front-end scarcity and changing issuance dynamics.

The question, they note, is how term premia would respond once long-end supply is reduced. While historical episodes show that a higher T-bill share has coincided with rising term premium, the bank does not view that relationship as causal.

Instead, prior spikes in bill issuance occurred during crises, when aggressive rate cuts and emergency funding needs altered curve dynamics. Short-term financing also carries risks. A heavier reliance on bills increases rollover exposure and could heighten concerns about fiscal dominance, particularly if markets question Federal Reserve independence. Larger and more frequent bill auctions could also raise the risk of volatility if demand falters.

The analysis highlights the growing macro footprint of stablecoins. Tether, the largest stablecoin issuer with roughly $185 billion in circulation, holds more than $120 billion in U.S. Treasury bills, placing it among the top global holders of short-term U.S. government debt. Earlier this year, Tether’s USAT CEO Bo Hines said the firm could expand its holdings even further and become a top-10 T-bill buyer.

At the same time, Standard Chartered has previously warned that stablecoin growth could drain as much as $500 billion from U.S. bank deposits by 2028, shifting funding from traditional banks into government debt markets.

Washington negotiates stablecoin rules

Regulatory momentum is accelerating alongside that capital rotation. The GENIUS Act established a federal framework for stablecoin issuance, while the SEC recently issued guidance clarifying capital treatment for brokers dealing in stablecoins.

Industry leaders have also met repeatedly with White House officials as lawmakers negotiate broader market structure legislation and debate yield-bearing stablecoin provisions.

While experts expect growth and policymakers debate regulatory structure, consumers are already tapping stablecoins in their daily lives. According to a recent global study, co-reported by  BVNK, conducted in partnership with Coinbase, YouGov, and Artemis, stablecoins are increasingly used as “everyday money” for savings, retail purchases, and day-to-day payments.

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