- Stablecoin market projected to reach $1.2 trillion by 2028 from $270 billion today.
- Issuers may buy $5.3 billion in Treasury bills weekly under growth forecasts.
- Sudden $3.5 billion redemptions could strain short term debt market liquidity.
- GENIUS Act requires issuers to hold full reserves with audits by 2027.
Coinbase Research projects the stablecoin market could hit $1.2 trillion by 2028. That marks a near fivefold jump from today’s $270 billion size. The forecast uses simulations that capture a range of outcomes, from rapid adoption to slower growth. As stablecoins embed deeper into finance, their effect on short-term debt and regulation grows harder to ignore.
Stablecoins and Their Expanding Role in Treasury Markets
The report highlights stablecoin issuers’ reliance on U.S. Treasury bills to back tokens. Circle and Tether, the largest players, typically hold short-term government securities to maintain one-to-one value.
If the market expands toward $1.2 trillion, weekly Treasury purchases could exceed $5.3 billion.
Coinbase sees stablecoin market growing 5x to $1.2T by 2028https://t.co/GEdhm2xrGZ
— John Morgan (@johnmorganFL) August 21, 2025
That demand may look small beside the $6 trillion U.S. money market. Yet, even minor shifts can sway yields. Coinbase estimates stablecoin demand could trim three-month Treasury yields by two to four basis points. The effect may seem marginal but lower borrowing costs ripple through institutions dependent on short-term funding. This dynamic illustrates the growing link between crypto and traditional finance.
Sudden Redemptions and Liquidity Pressures
Furthermore, the report also examines risks tied to sudden outflows. A $3.5 billion redemption in days could force issuers to sell Treasuries fast. That liquidation could strain liquidity in short-term debt markets and trigger temporary disruptions.
The risk is real. Stablecoins may act like digital cash, but they rely on deep and stable debt markets. If several issuers unwind positions at once, the stress compounds.
This shows the tradeoff between rapid adoption and financial stability. Liquidity management remains key to sustaining confidence, especially in volatile conditions.
Regulatory Shifts and the Path to Stability
Building on redemption risks, regulation now sits at the center of the sector’s future. Earlier this year, the GENIUS Act passed in the U.S., with enforcement set for 2027.
It requires issuers to hold full reserves, undergo audits, and offer bankruptcy protections for token holders. These safeguards aim to prevent destabilizing runs and build trust.
But the act excludes access to Federal Reserve liquidity facilities. Issuers must rely solely on reserves and risk controls. Coinbase notes this gap leaves them exposed during large redemptions, even under tighter rules. Still, legal clarity may invite traditional financial institutions to engage, strengthening the ecosystem over time.
Modeling the Path Ahead
In addition, Coinbase takes a different route from standard forecasts. Its model runs 20,000 Monte Carlo simulations with an autoregressive process. The approach considers current supply and growth rates to map possible futures.
Results show a median path near $1.2 trillion by December 2028. The uncertainty band remains wide. Fast adoption could push beyond $1.4 trillion. Slower growth might keep the market under $1 trillion.
The compounding effect of adoption—more use driving more utility—remains central. Today, stablecoins already serve in payments, remittances, and decentralized finance. These roles give the sector a firm base for expansion.
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