Standard Chartered Warns: Stablecoins Could Reshape U.S. Treasury Market at $750 Billion Threshold

Standard Chartered’s digital assets team projects that stablecoins could reach a combined market capitalization of $750 billion by 2026—triggering a substantial shift in demand dynamics for U.S. Treasuries. This expansion is expected to create outsized buying pressure on short-duration government debt, potentially reshaping both the yield curve and Treasury issuance strategies.

Under current regulatory frameworks—such as the Senate-passed GENIUS Act—stablecoin issuers are mandated to hold reserves in safe, liquid assets like Treasury bills. Already, top issuers Circle and Tether hold more than $160 billion in T-bills and reposops. As stablecoin issuance accelerates, each new token will require a matching Treasury investment, broadening the short-end liquidity pool.

Research indicates that these inflows are already affecting the Treasury yield curve. A Bank for International Settlements working paper found that stablecoin issuances of $3.5 billion over a five-day period lowered three-month Treasury yields by 2–2.5 basis points. Conversely, large sell-offs pushed yields up by 6–8 basis points. Meanwhile, Tether alone accounts for roughly 1.6% of T-bill holdings, a share size correlated with as much as 24 basis points of yield suppression.

While there are potential efficiencies—such as deeper liquidity in government bills and improved dollar demand abroad—analysts also caution that rapid stablecoin growth could limit the Federal Reserve’s control over short-term rates. A sudden rush to liquidate could send yield spikes across the curve, posing risks to market stability. Concentration within a handful of issuers, operational opacity, and emerging-market vulnerabilities add further complexity.