Key Insights on Stablecoins’ Growth
Stablecoins, which are digital currencies linked mainly to fiat currencies like the U.S. dollar, are anticipated to grow to $1.2 trillion by 2028. This expansion could significantly affect the U.S. debt markets, as predicted by analysts at Coinbase in a recent report.
- The analysis forecasts that stablecoins will expand nearly five times from the current market size of $270 billion.
- Achieving this growth would necessitate an increase of $5.3 billion in new Treasury bill acquisitions each week, potentially resulting in lower yields.
- Conversely, a rapid redemption of stablecoins may trigger forced selling in traditional markets, pressuring liquidity of Treasury bills.
The financial flow could result in a drop of 2-4 basis points in the three-month Treasury yield over time, which, while minimal, could have noteworthy implications in the $6 trillion money market where minor fluctuations can impact institutional funding costs.
Coinbase’s report emphasized the significance of newly passed stablecoin regulations called the GENIUS Act, effective in 2027. This law will enforce reserves, audits, and protections for holders, thereby minimizing risks associated with rapid outflows.
For more details, refer to Coinbase’s full report.
