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 prompted rapid Treasury sales, straining liquidity in the short-term debt market.
Regulation and risk management
The forecast highlighted the role of policy in shaping the next stage of stablecoin adoption as legislation, including the GENIUS Act, becomes effective.
The GENIUS Act, which passed earlier this year and takes effect in 2027, requires issuers to maintain full reserves, undergo independent audits, and provide bankruptcy protections to token holders.
While the law does not allow stablecoin providers access to Federal Reserve liquidity facilities, Coinbase analysts said the framework should reduce the chance of destabilizing runs.
Clearer rules could also give traditional financial institutions more confidence to engage with the sector, supporting steady growth rather than speculative bursts.
The report emphasized that stablecoins are no longer confined to crypto trading but are increasingly used as settlement tools and payment rails. It added that with adoption compounding over time, the impact of stablecoins may soon extend well beyond digital assets, altering the dynamics of U.S. government debt markets in the process.
