Stablecoins to Grow 10x: Standard Chartered
Digital dollars are poised to reshape global finance by 2028
Stablecoins are on a path to potentially dominate US Treasury transactions.
Standard Chartered's latest report projects these digital dollars will surge from $230 billion to $2 trillion by 2028, potentially absorbing virtually all new Treasury bill issuance during US President Donald Trump's second term.
This represents a $1.6 trillion financial transformation that could reshape global capital flows and either cement or challenge dollar hegemony.
When was the last time a financial instrument grew tenfold in just four years?
The mechanics are straightforward. To maintain their dollar pegs, stablecoin issuers need reserves, primarily short-term US Treasury bills.
Circle's USDC model is becoming the template: 88% of its reserves in T-bills with a mere 12-day average duration. As stablecoins add $1.77 trillion in circulation over four years, they'll need to purchase roughly $1.6 trillion in T-bills.
For context: Tether (USDT) and Circle (USDC) already command $145 billion and $60 billion in circulation, respectively.
European officials fear that American digital dollars will further entrench US financial dominance at Europe's expense.
Every stablecoin backed by Treasury bills essentially exports American monetary policy globally, reinforcing dollar hegemony just as some had hoped crypto might challenge it.
European officials now push for faster digital euro adoption, but they're playing catch-up in a race where America has suddenly accelerated.
This projected growth reflects deliberate policy choices. It's being actively facilitated by the GENIUS and STABLE Acts, landmark legislation cleared by the Senate Banking Committee last month and potentially becoming law by mid-2025.
These bills create the first comprehensive federal framework for stablecoin issuance, mandating transparency, 1:1 reserves, and anti-money laundering compliance.
Traditional finance isn't sitting this out. JPMorgan and other banking behemoths are diving in, setting up fierce competition with crypto-native issuers like Tether and Circle.
"We are going to see banks issuing stablecoins, as they are under MiCA," notes Ran Goldi, SVP of Payments at Fireblocks, referring to Europe's new crypto regulatory framework.
Fireblocks reports stablecoin volumes have already surged from less than 20% of transactions in 2020 to 54% in 2024.
Beyond Treasury markets, stablecoins are rewiring global payment infrastructure.
Brazilian importers now pay Turkish exporters in stablecoins, bypassing traditional SWIFT channels and showcasing the efficiency of these digital dollars for cross-border commerce.
Will stablecoins ultimately strengthen or weaken dollar dominance?
For now, the Treasury-backed stablecoin boom appears set to reinforce America's financial position. Every new dollar-pegged token creates additional demand for US debt and extends the reach of American monetary policy.
But the longer-term picture remains unclear. Non-USD stablecoins or multi-currency baskets could eventually emerge as meaningful alternatives, potentially fracturing what's currently a dollar-dominated landscape.