The stablecoin market is expected to expand dramatically over the next two years, reaching a total valuation of $1.2 trillion, according to a new research report from Coinbase. This growth—representing a nearly fivefold increase from the current $270 billion market—could have measurable effects on U.S. Treasury yields and money market liquidity.
Key Projections
- Stablecoin market capitalization is forecast to grow to $1.2 trillion by 2028
- Expansion driven by incremental, policy-enabled adoption
- Major issuers like Circle (USDC) and Tether (USDT) expected to significantly increase weekly Treasury bill purchases
Impact on Treasury Markets
- Stablecoin growth could generate approximately $5.3 billion in new weekly T-bill demand
- This additional demand may reduce 3-month Treasury yields by 2-4 basis points
- Report notes potential for market disruption: $3.5 billion in redemptions over five days could trigger forced selling and tighten liquidity
Regulatory Framework
The recently passed GENIUS Act, set to take effect in 2027, establishes crucial safeguards:
- Mandates full reserve backing for all stablecoins
- Requires regular audits and bankruptcy protections for holders
- Aims to reduce risk of destabilizing runs while stopping short of granting Federal Reserve access
Market Implications
The projected growth highlights stablecoins’ evolving role from cryptocurrency trading instruments to potentially influential players in traditional debt markets. As adoption increases, these digital assets may begin to exert noticeable influence on short-term borrowing costs and Treasury market liquidity.
“This analysis demonstrates how crypto-native innovations are increasingly intersecting with traditional finance,” said David Duong, head of Coinbase Research. “The stablecoin market’s growth could have tangible effects on sovereign debt markets within just two years.”
The report emphasizes that while the GENIUS Act provides important protections, market participants should remain aware of potential liquidity risks during periods of significant redemption pressure.
