Stablecoins Could Hit $1.2 Trillion and Shake U.S. Debt

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Stablecoins may soon reshape not only crypto markets but also U.S. government debt markets, according to a new Coinbase research report published on Aug. 21.

The exchange projects that the stablecoin sector could balloon from its current $270 billion size to as much as $1.2 trillion by 2028, nearly a fivefold increase.

Billions Flowing Into Treasuries Each Week

Because most stablecoins are backed by U.S. dollars and short-term government securities, rapid growth would have real implications for the Treasury market. Coinbase analysts estimated that issuers like Circle and Tether could eventually be buying $5.3 billion worth of Treasury bills every week just to maintain reserves.

Even small moves in this space matter. Such steady demand could shave two to four basis points off yields on three-month Treasuries, a seemingly minor shift with significant consequences across the $6 trillion money market, which sets borrowing costs for banks, corporations, and governments.

But Coinbase also warned the flow of funds may not always be one-way. A sudden wave of redemptions — for example, a $3.5 billion outflow in a single week — could trigger large Treasury sales, potentially straining short-term liquidity.

Regulation Could Shape the Market’s Next Phase

The report pointed to the recently passed GENIUS Act, set to take effect in 2027, as a key turning point. The law requires stablecoin issuers to hold full reserves, undergo independent audits, and provide bankruptcy protections for token holders.

While the rules stop short of giving issuers access to Federal Reserve liquidity, Coinbase argued the framework should make runs less likely and attract more institutional participants. Clearer regulations, the report said, could pave the way for mainstream financial institutions to embrace stablecoins not just as trading tools but as settlement infrastructure and payment rails.

Beyond Crypto Trading

Once seen as primarily a bridge currency for crypto exchanges, stablecoins are now playing a larger role in payments and global finance. Coinbase’s analysis suggests that this accelerating adoption could alter how U.S. government debt markets function, as digital tokens pegged to the dollar become tightly interwoven with the financial system.

The information provided in this article is for informational purposes only and does not constitute financial, investment, or trading advice. Coindoo.com does not endorse or recommend any specific investment strategy or cryptocurrency. Always conduct your own research and consult with a licensed financial advisor before making any investment decisions.

Author

Alexander Zdravkov is a person who always looks for the logic behind things. He is fluent in German and has more than 3 years of experience in the crypto space, where he skillfully identifies new trends in the world of digital currencies. Whether providing in-depth analysis or daily reports on all topics, his deep understanding and enthusiasm for what he does make him a valuable member of the team.