It is as if they are reading what we write here.

Standard Chartered, a 170 year old bank, has come out with their analysis of the stablecoin market. Due to the expect growth from the GENIUS act, which has passed committee in the United States Senate, we are looking at a potential 10x in the size of the market.

According to the bank, the estimate is the market will hit $2 trillion by the end of 2028. This is a familiar figure for those who read my articles.

A 10x from the present levels would place this at roughly $2.3 trillion, a figure of significance as I will show in a moment.

It seems that many who are looking at things closely are coming to similar conclusions as we have talked about.

Source

Standard Chartered: $2 Trillion In Stablecoins By 2028

Stablecoins will be the medium of exchange in the future. This is going to take over online transactions as entities seek to remove friction from the process. It will be coupled by the fact that many are going to want to enjoy the benefits of offering stablecoins on their platforms.

Essentially, we are seeing the Circle model followed. Regulation is going to push issuers in this direction. To engage with regulated entities, i.e. banks or centralized exchanges, this will need to be met.

Circle "sells" the stablecoin for $1. With the money, it uses 80% to purchase US Treasury bills with the other 20% remaining in cash. The GENIUS act is following a similar ratio, although it would allow for other assets of high liquidity other than just Treasuries.

That said, it is likely that most will default to T-bills.

The United States SEC just ruled that stablecoins are not considered securities as long as the proceeds from the asset backing are not distributed. This means the issuer is has to keep the money.

It is something that will naturally be appealing to the companies looking to get involved.

As an aside, the SEC has yet to rule on "staked" stablecoins where the purchasers are paid on the earning from the backing assets. It is likely these will be considered securities when all the regulation is in place.

Largest Buyers of US Treasuries

The bank did look at the impact on Treasuries. It is an overlooked component to what will be taking place.

My guess is that stablecoin issues become the largest holders of US debt. If we see another $2 trillion added, that means $1.6 trillion of T-bills will be purchased.

That potential growth may lead stablecoin issuers to buy $1.6 trillion in U.S. Treasury bills for their reserves — enough to absorb all new issuance during Trump’s second term, the bank said.

That level of growth would spur demand for $1.6 trillion worth of U.S. Treasury bills over the next four years, the analysts said — enough to absorb all new T-bill issuance expected during President Donald Trump's second term.

Source

This would further cement the US dollar as the global currency although it would not really be dollars that are utilized. Instead, we are looking at a US dollar denominated asset that is use for transacting.

So why is the 10x important?

Other than showing massive growth, there is another factor to consider. When looking at the Federal Reserve's most recent H.6, we see the supply of banknotes (physical dollars) is $2.352 trillion.

What this means is the number of stablecoins, if the forecast is correct, would rival the number of physical US dollars in existence. It is a feat that would be a achieve in only a few years.

This is an operation that is taking place outside the US money supply. New dollars are not being created. It requires a dollar to generate a stablecoin. It is a process that does not involve the commercial banks (although many will create their own coins).

The result is more financial activity is available. The dollars are still in existence with a derivative (token) also being produced.

As we move further into the digital world, especially since it is being driven by AI, this ability to expand at a pace unforeseen is going to be crucial. The economic singularity is going to require a great deal of funding.

Cryptocurrency is the only way to keep pace.

Posted Using INLEO