Stablecoin issuers are poised to become significant holders of U.S. Treasury securities, potentially surpassing major foreign governments, according to a new report from global bank Citi.
Citi’s analysts predict that 2025 could mark a transformative moment for blockchain adoption, driven by the rise of stablecoins, similar to how artificial intelligence (AI) broke through with the release of ChatGPT in 2023.
“2025 could be blockchain’s ‘ChatGPT’ moment,” Citi’s analysts stated in a report published earlier this week.
At the core of Citi’s outlook are stablecoins, cryptocurrencies that are pegged to traditional currencies like the U.S. dollar. Leading stablecoins like Tether’s $145 billion USDT and Circle’s $60 billion USDC have experienced rapid growth and are being increasingly adopted for global payments and remittances.
Citi projects that the stablecoin market could reach $1.6 trillion by 2030, up from its current $230 billion market cap, assuming regulatory clarity and institutional adoption continue to progress. In a more optimistic scenario, the market could even swell to $3.7 trillion, although Citi acknowledges that structural challenges could cap it closer to $500 billion.
A key catalyst for this growth is the favorable regulatory environment in the U.S., especially following a presidential executive order to create a federal framework for digital assets. With clearer rules on stablecoins, the tokens could become more deeply integrated into the financial system, enabling faster transactions, greater transparency, and more efficient asset settlements.
“This could lead to increased adoption of blockchain-based money and spur new use cases across both financial services and broader sectors in the U.S.,” the report noted.
Stablecoin Issuers Becoming Major Buyers of U.S. Treasuries
The report predicts that stablecoins will continue to be largely dollar-denominated, with Citi projecting that 90% of stablecoins in circulation by 2030 will be pegged to the U.S. dollar, solidifying the dollar’s dominance in the global economy.
This shift could have significant consequences for the financial system. Stablecoin issuers may emerge as major buyers of U.S. Treasuries if regulations require them to back their tokens with low-risk, highly liquid assets such as government bonds. Citi estimates that issuers could hold up to $1.2 trillion in U.S. government debt by the end of the decade, potentially surpassing the holdings of all foreign sovereign nations.
At the same time, central banks in regions like Europe and Asia are likely to continue exploring their own central bank digital currencies (CBDCs), the report noted.
Risks to Stablecoin Growth
Despite the optimistic outlook, the report also highlights several risks to stablecoin growth. Stablecoins experienced nearly 1,900 instances of de-pegging in 2023, with over 600 involving major tokens, according to data from Moody’s.
In extreme situations, such as mass redemptions following the collapse of Silicon Valley Bank (SVB), which affected USDC, liquidity disruptions could occur, leading to forced sell-offs and broader financial instability, the authors cautioned.
