New research from Standard Chartered suggests that stablecoin issuers are set to significantly impact U.S. Treasury markets, potentially purchasing up to $1.6 trillion in T-bills over the next four years.

Key Insights

• Surge in Stablecoin Supply:

  • Currently, the total stablecoin supply is approximately $230 billion.

  • Once the GENIUS Act, a bill aimed at clarifying stablecoin regulations, passes, supply could soar to $2 trillion by 2028.

• Effects on U.S. Treasury Markets:

  • The anticipated regulatory clarity from the GENIUS Act is encouraging stablecoin issuers to increase their T-bill holdings.

  • Analysts estimate this transition could result in approximately $400 billion in new T-bill purchases each year.

  • Stablecoin issuers might become the second-largest T-bill purchasers after money-market funds, which currently hold about $2.4 trillion.

• Strategic Adjustments Needed:

  • To adhere to regulatory norms and boost liquidity, stablecoin issuers are likely to follow strategies like Circle’s model. For example, USD Coin keeps 88% of its reserves in T-bills with an average duration of 12 days.

  • The GENIUS Act requires these reserves to be held for 93 days or less, influencing issuer strategies.

  • Analyst Geoff Kendrick notes that stablecoin issuers may prefer shorter-duration assets around FOMC meetings to mitigate risk.

• Long-Term Economic Benefits:

  • Increased stablecoin issuance and T-bill purchases are anticipated to enhance long-term demand for U.S. dollars.

  • Standard Chartered projects that the inflow could absorb most new T-bill issuance during the current U.S. administration’s term.

Market Outlook

This research indicates that passing the GENIUS Act could dramatically reshape the stablecoin industry and significantly influence U.S. Treasury holdings. As stablecoins gain traction in mainstream finance, their growing demand for T-bills is set to impact both digital assets and traditional financial markets.

For Further Insights

Investors interested in daily metrics and tracking the growing dynamics of the stablecoin market can visit entreprenerdly.com.