This growth is projected to create up to $1 trillion in new demand for Treasury bills as issuers seek highly liquid reserves to back their digital tokens.
Issuers could create $1 trillion in excess demand for Treasury bills.
Stablecoin issuers are quickly becoming the largest buyers of US Treasury bills. Analysts at Standard Chartered believe this trend could fundamentally change the structure of US government debt issuance over the next three years.
The stablecoin market capitalization is expected to reach $2 trillion by the end of 2028. This growth is projected to create up to $1 trillion in new demand for Treasury bills as issuers seek highly liquid reserves to back their digital tokens.
While stablecoin market growth has recently slowed following the passage of the US GENIUS Act, analysts view this as a cyclical slowdown. Combined with the Federal Reserve's measures, total new demand for Treasury bills could rise to $2.2 trillion. This significantly exceeds the $1.3 trillion in new supply expected if the Treasury maintains its current debt ratio. Without government intervention, analysts warn that Treasury bills could become "too scarce" for the private sector.
A Golden Opportunity for Treasury Secretary Scott Bessent
The projected excess demand of $0.9 trillion presents Treasury Secretary Scott Bessent with a unique tactical opportunity. The Treasury could increase its share of Treasury bills to mitigate the shortfall at the short end of the yield curve.
Treasury bill issuance currently accounts for 21.7% of total debt. While this is above recent recommendations, it remains significantly below the post-war average of 26.1%. Increasing this share by just 2.5 percentage points would offset the additional demand.
Most notably, Standard Chartered notes that shifting this $0.9 trillion in supply from bonds to bills could have a dramatic effect. Under the current auction schedule, this would effectively allow the Treasury to suspend all 30-year bond auctions for the next three years.
Such a move would likely lead to a "bullish flattening" of the yield curve. While analysts' baseline scenario for 2026 remains a "bearish upward slope," they warn that the growing influence of digital asset reserves is a risk that bond investors should now closely monitor.