U.S. Treasury officials predict the stablecoin market will reach $2 trillion by 2028, representing a sevenfold increase from the current $240 billion market capitalization, according to a Treasury Borrowing Advisory Committee report released Tuesday.
What to Know:
- Treasury forecasts stablecoin market cap to grow sevenfold to $2 trillion by 2028
- USD-pegged stablecoins currently dominate the market with Tether (USDT) leading at $145 billion
- MEXC exchange executive predicts $2 trillion milestone could be reached by 2026, two years earlier than Treasury estimates
The Treasury Department's optimistic outlook appeared in the Treasury Borrowing Advisory Committee's report, which identified several catalysts for rapid adoption and market expansion. Growing institutional interest in cryptocurrency products, broader merchant integrations, and the emergence of interest-bearing stablecoins are driving what could become a significant shift in financial markets.
"Evolving market dynamics, structures, and incentives have the potential to accelerate stablecoins' trajectory to reach ~$2 trillion in market cap by 2028," the report stated.
Stablecoins serve as a crucial component in blockchain-based transactions, particularly as financial asset tokenization gains momentum.
Their importance grows as platforms like PayPal integrate stablecoin compatibility, expanding practical payment applications beyond cryptocurrency trading.
The rise of yield-generating stablecoins has enhanced their appeal as both value stores and investment vehicles. Meanwhile, regulatory frameworks are becoming clearer, potentially allowing these digital assets to be included in liquidity management strategies and enabling banks to access public blockchains.
Currently, USD-pegged stablecoins dominate the $240 billion market, accounting for over 99% of the total capitalization. Tether's USDT leads with $145 billion, while [Circle's USDC}(https://yellow.com/asset/usdt) follows with $60 billion in market value.
Market Impact and Industry Perspectives
The growing adoption of stablecoins could significantly impact traditional banking and Treasury markets, potentially forcing banks to raise interest rates or seek alternative funding as consumers shift from conventional deposits to stablecoin holdings.
The TBAC report noted that passage of the GENIUS Act could increase demand for short-term Treasuries, as the proposed legislation would require stablecoin issuers to hold U.S. Treasuries as reserves. These requirements could mitigate de-pegging risks and reduce issuers' reliance on the Federal Reserve during market volatility.
"Demand in stablecoins could have a net neutral impact on the U.S. money supply, however the attractiveness of USD-pegged stablecoins could drive currently non-USD liquidity holdings into USD," the report added.
Some industry executives believe the $2 trillion milestone could arrive earlier than the Treasury's forecast. Tracy Jin, COO of cryptocurrency exchange MEXC, thinks that the market could reach this level by 2026, citing sovereign banks and corporations exploring stablecoin issuance in various fiat currencies.
"With many sovereign banks and corporations exploring stablecoin issuance, particularly in other fiat currencies, and governments prioritizing regulation clarity, the stablecoin market cap could exceed $2 trillion by 2026," Jin said.
Jin highlighted stablecoins' resilience amid economic uncertainty, noting that demand has grown by over $38 billion year-to-date. "Stablecoins now account for 1% of the global M2 USD money supply, processing over $33 trillion in volume in the last year, including $2.8 trillion in the last month alone," she stated.
According to Jin, these digital assets play an expanding role in decentralized finance, cross-border payments, and digital asset trading. Their ability to provide stability during market volatility makes them increasingly important for both institutional and retail investors.
Closing Thoughts
The stablecoin market appears poised for significant expansion as institutional adoption increases and regulatory frameworks mature. With $240 billion in current market capitalization potentially growing to $2 trillion within four years, these digital assets could reshape traditional financial systems while cementing their position in the evolving cryptocurrency ecosystem.