In a striking projection, Coinbase analysts have forecasted that the stablecoin market, currently valued at around $270 billion, could skyrocket to a staggering $1.2 trillion by 2028. This potential expansion, detailed in a report released last Thursday, might even send ripples through the U.S. debt markets, subtly impacting Treasury yields.
Stablecoins on the Rise
Stablecoins, digital tokens pegged mostly to fiat currencies like the U.S. dollar, are poised for explosive growth. According to the report led by David Duong, this ballooning market is grounded in a stochastic model simulating numerous growth trajectories for the sector. The projection hinges on “incremental, policy-enabled adoption compounding over time,” as stated in the report.
Key players in this space, such as Circle—issuer of USDC—and Tether, which backs USDT, maintain substantial portfolios of U.S. Treasury bills to stabilize their tokens. If the market swells to the anticipated $1.2 trillion, this could equate to about $5.3 billion in new T-bill purchases weekly. Such inflows, while seemingly minor, might shave 2-4 basis points off the three-month Treasury yield—a small change with outsized effects in the mammoth $6 trillion money market. This trend aligns with insights from Inside Wall Street’s Stablecoin Boom, which explores the growing influence of stablecoins on traditional financial markets.
Regulatory Landscape and Market Dynamics
The GENIUS Act, a newly passed regulation set to take effect in 2027, plays a pivotal role in this narrative. This legislation requires stablecoin issuers to maintain one-to-one reserves, undergo regular audits, and provide bankruptcy protections for holders. While the Act stops short of granting issuers direct access to Federal Reserve facilities, it aims to mitigate the risk of destabilizing runs on stablecoins.
“This regulatory framework could be a game-changer,” noted an analyst familiar with the report. “By enforcing stringent reserve requirements, the GENIUS Act could bolster market confidence, potentially smoothing the path for stablecoin adoption.”
Yet, the road to 2028 isn’t without its bumps. Redemption surges pose a real threat. The report warns that a $3.5 billion outflow over a mere five days could trigger forced selling, constricting liquidity in the T-bill market. Such scenarios underscore the delicate balance stablecoin issuers must maintain to prevent market disruptions.
The Bigger Picture
The anticipated growth of stablecoins is not happening in a vacuum. As these digital tokens gain traction, they are set to exert mounting pressure on traditional financial instruments, including money market funds. This evolving landscape raises questions about the interplay between digital and traditional finance. For further insights, see our coverage of how the Stablecoin Boom Has Made Crypto Ramps ‘Sexier’ M&A Targets, highlighting the increasing attractiveness of crypto platforms in the financial sector.
“With stablecoins gaining ground, we’re witnessing a fundamental shift,” remarked another financial expert. “The integration of digital assets into the broader financial ecosystem could reshape investment strategies and regulatory approaches alike.”
As 2025 unfolds, the trajectory towards a $1.2 trillion stablecoin market is fraught with challenges and opportunities alike. While regulatory measures like the GENIUS Act provide a semblance of stability, the journey ahead will test the resilience of issuers and regulators.
The implications of this growth on U.S. debt markets remain to be seen. Will the projected inflows stabilize or unsettle these markets? The answers will likely unfold over the next few years, offering a fascinating glimpse into the future of finance.
Source
This article is based on: Stablecoin Market Could Hit $1.2T by 2028, Maybe Affecting U.S. Government Debt Yields: Coinbase
Further Reading
Deepen your understanding with these related articles:
- Stablecoin Boom Has Made Crypto Ramps ‘Sexier’ M&A Targets, Says VanEck VC
- Inside Wall Street’s Stablecoin Boom
- Tether Taps Trump’s Ex-Crypto Council Chief for US Stablecoin Push | US Crypto News
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
