Stablecoins are digital tokens designed to hold a steady value, usually one-to-one with the U.S. dollar. To keep that peg, issuers like Tether and Circle (CRCL) park their cash reserves in safe, liquid assets - mostly short-term Treasury bills (T-bills). T-bills are government debt that matures in a year or less.
Standard Chartered forecasts that by the end of 2028, the stablecoin sector will grow to $2 trillion. To back those new tokens, issuers will need to buy more T-bills. This growth could create as much as $1 trillion of new demand for short-term Treasury bills. The bank's analysts, Geoff Kendrick and John Davies, put the number at up to $1 trillion of fresh demand over that period. They wrote: "This will result in c. $0.8-$1.0 trillion of fresh demand for T-bills (for use as reserves) from stablecoin issuers over that period."
Add in projected Federal Reserve buying of $1-$1.2 trillion, and total new T-bill demand through 2028 could reach about $2.2 trillion. But the net new supply of T-bills - if the Treasury keeps its current debt mix - is only roughly $1.3 trillion. That implies a potential shortfall of $0.9 trillion.
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Standard Chartered expects the Treasury to increase the share of bills in its total borrowing. That means issuing more T-bills and fewer long-term bonds. According to the bank, to close the $0.9 trillion shortfall, the Treasury would have to increase the proportion of T-bills in its overall debt by 2.5 percentage points across three years.
One way to do that: effectively suspend auctions of 30-year bonds for three years. This approach would create room for more short-term debt sales and reduce the upward force on longer-dated yields, the report notes. The 10-year Treasury yield, a benchmark for mortgages and corporate loans, could reach 4.6% by the end of 2026, though the bank notes this is not its base case.
The Treasury itself has noticed the trend. During its quarterly refunding update on February 4, the Treasury stated that it "is monitoring SOMA purchases of Treasury bills and growing demand for Treasury bills from the private sector." SOMA refers to the Fed's System Open Market Account, which also buys T-bills.
However, stablecoin expansion has recently halted around the $300 billion mark, due to declining crypto prices and a slowdown in issuance after the GENIUS Act. Bitcoin has dropped by over half from its October 2025 high of $126,000, curbing demand driven by trading activity. The bank sees these challenges as temporary and continues to believe that stablecoins might contribute almost $1 trillion in additional T-bill demand by 2028, altering the U.S. interest rate landscape.
Watch for the Treasury's next quarterly refunding statements for any signal that it plans to shift more issuance to T-bills. Also keep an eye on stablecoin market data - a rebound in crypto prices could accelerate demand.
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