Rising demand from stablecoin issuers could significantly alter how the United States finances its debt over the next several years, according to a new report from Standard Chartered. The bank projects that stablecoins may generate between 0.8 trillion and 1 trillion dollars in additional demand for US Treasury bills by the end of 2028, a shift that could influence decisions around long term bond issuance.
Stablecoins, which are typically backed by short term US government securities and cash equivalents, have grown into major buyers of Treasury bills as part of their reserve management strategies. As new tokens are issued, providers allocate inflows into highly liquid and low risk instruments such as T bills to maintain redemption stability while earning yield. Standard Chartered expects this dynamic to intensify as the global stablecoin market expands.
When combined with projected Federal Reserve purchases of short term government debt, total new demand for Treasury bills could reach approximately 2.2 trillion dollars through 2028. In comparison, current projections suggest net new supply of T bills would total about 1.3 trillion dollars if issuance patterns remain unchanged. This gap implies potential excess demand of roughly 900 billion dollars at the front end of the yield curve.
The bank suggests that the US Treasury could respond by increasing the share of short term bills in its overall issuance mix. Reallocating issuance away from longer dated bonds toward T bills could help meet demand from stablecoin issuers and other buyers. In an extreme scenario, analysts note that such a shift could allow the Treasury to suspend 30 year bond auctions for a multi year period, though this would depend on broader fiscal and market conditions.
Emerging markets are expected to account for a significant portion of incremental demand. Standard Chartered estimates that roughly two thirds of projected T bill demand from stablecoins may originate from emerging market adoption, representing net new inflows into US government securities. In developed markets, stablecoins are more likely to substitute for existing money market or short term holdings rather than create entirely new demand.
The implications for the US Treasury yield curve could be substantial. Increasing T bill issuance while trimming long term bond supply would initially flatten the curve by raising short term issuance relative to long dated securities. However, longer term yields would continue to be influenced by fiscal deficit trends, inflation expectations and investor sentiment.
While stablecoin market growth has moderated in recent months amid broader crypto volatility, analysts characterize the slowdown as cyclical. If adoption resumes and market capitalization approaches multi trillion dollar levels, digital dollar issuers could become one of the largest marginal buyers of short term US government debt, reinforcing the link between blockchain based finance and traditional fixed income markets.
