The stablecoin market may grow to $1.2 trillion by 2028, with possible effects on U.S. government bond yields, according to Coinbase.

The stablecoin market is projected to surge to $1.2 trillion by 2028—nearly five times its current size—potentially reshaping U.S. debt markets and reducing short-term borrowing costs, according to a new stochastic modeling study from Coinbase.

📈 Growth Trajectory

Current Market: $270B
2028 Forecast: $1.2T
Key Driver: Compounding policy-led adoption
Model Used: Thousands of stochastic simulations run by Coinbase Research

🧾 Impact on U.S. Treasury Markets

Demand Effect:

Stablecoin growth could drive $5.3B in weekly T-bill purchases
May lower 3-month Treasury yields by 2–4 bps
Notable influence in the $6T money market, where small yield shifts affect institutional funding

Liquidity Risk:

A $3.5B outflow over 5 days could trigger cascading sell-offs
Rapid redemptions might tighten T-bill market liquidity

🛡️ The GENIUS Act: Stabilizing the System

Effective 2027, the new law ensures:

Full 1:1 reserve backing
Mandatory audits and holder bankruptcy protections
Reduced risk of destabilizing runs (though no Fed lending access)

🌍 Why It Matters

Stablecoins are transitioning from a crypto-native tool to a systemically relevant financial instrument:

Influencing sovereign debt pricing
Bridging digital and traditional finance
Requiring coordinated regulatory oversight

💬 Expert Insight

“We’re witnessing the birth of a new monetary layer,” said David Duong, Head of Research at Coinbase. “Stablecoins don’t just serve crypto—they now play a role in national liquidity and debt management.”

📌 Looking Ahead

Monitor weekly T-bill purchase volumes from issuers like Circle and Tether
Track regulatory rollout of the GENIUS Act through 2027
Watch for yield compression in short-term government securities

This report underscores how crypto-driven innovation is increasingly intertwined with mainstream finance—offering both new opportunities and systemic risks that demand prudent oversight.