Asia Morning Update: Stablecoins—Fueling Dollar Demand or Triggering a Liquidity Crisis?

While traders focused on Jerome Powell’s latest rate signals, stablecoins are quietly emerging as a key lever on Treasury liquidity, raising questions about whether they stabilize markets or amplify shocks.

The stablecoin market has nearly doubled to $280 billion over the past year, with most issuers holding short-term Treasuries as collateral. According to OKX Singapore CEO Gracie Lin, this ties crypto liquidity directly to Federal Reserve policy.

“Beyond the headlines, stablecoins are providing stronger long-term price signals,” Lin told CoinDesk. “The next step is unification — the rails exist, now they need a market that delivers liquidity, efficiency, and utility for investors.”

Coinbase analysts estimate the market could grow to $1.2 trillion by 2028, potentially requiring $5.3 billion in new weekly Treasury purchases. While inflows may slightly lower yields, redemption surges could force selling and drain liquidity.

The debate continues: Barry Eichengreen warns of a 2008-style money-market panic, while former U.S. Comptroller Brian Brooks says Treasury-backed stablecoins provide safety akin to national banking reforms. Coinbase’s models suggest stablecoins reduce yields, Brooks calls them a global dollar engine, and Lin emphasizes the importance of market unification to prevent stress.

Market Snapshot

• BTC: Trading above $111,300, consolidating amid macro caution.
• ETH: At $4,320, up 0.6%, reflecting renewed altcoin demand.
• Gold: Surpasses $3,540 an ounce, hitting a new record on Fed rate cut expectations and geopolitical uncertainty.
• Nikkei 225: Stable, supported by foreign inflows, reforms, and global capital trends toward Japan.

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