Stablecoins could swell to a $1.2 trillion market by 2028 and begin exerting pressure on U.S. debt markets, according to an Aug. 21 Coinbase report.
The projection, based on thousands of growth simulations, outlines a path for the market to expand nearly 5x from its current size of $270 billion.
The report comes as the sector faces increasing regulatory oversight while also embedding itself more deeply into global finance.
Growing role in Treasury markets
Stablecoins, digital tokens pegged primarily to the U.S. dollar, are issued by firms such as Circle and Tether that hold short-term government securities to back the tokens in circulation.
Coinbase estimated that if growth continues on its projected trajectory, issuers would need to purchase roughly $5.3 billion in Treasury bills each week.
That demand could trim between two and four basis points from the yield on three-month Treasuries over time, a subtle shift but one that matters in the $6 trillion money market, where marginal moves influence borrowing costs for banks, corporations, and other institutions.
Coinbase also warned that the flow of funds may not always be in one direction. Sudden redemption waves could force issuers to unwind positions quickly.
The report modeled a scenario where a $3.5 billion outflow in less than a week
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Author: Assad Jafri
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