Title: U.S. Treasury Eyes Increased T-Bill Issuance Amid Stablecoin Surge
The U.S. Treasury is poised to increase Treasury bill (T-bill) issuance as Standard Chartered forecasts a burgeoning demand driven by stablecoins. The bank projects that the stablecoin market cap will hit $2 trillion by the end of 2028, translating into approximately $1 trillion in fresh demand for T-bills. This increased demand could allow the Treasury to ramp up issuance and potentially halt 30-year bond auctions.
As the stablecoin market currently stands at $300-$320 billion, the expected growth represents a significant shift. Stablecoin issuers like Tether and Circle are already major buyers of short-term U.S. government debt, holding substantial T-bill reserves. Tether’s holdings now rival those of mid-sized sovereign investors, underscoring the scale of their financial influence.
By 2028, the combined demand from stablecoins and an estimated $1-$1.2 trillion in Federal Reserve purchases could push new T-bill demand to $2.2 trillion. This contrasts with a projected supply of around $1.3 trillion, suggesting a potential shortfall of $900 billion. Such a gap highlights the pressure on the Treasury to adapt its debt strategy.
Analyst Insight
Stablecoin growth could fundamentally alter U.S. debt dynamics, shifting demand towards short-term securities and affecting long-term bond strategies.
The rise of stablecoins as major financial players raises critical questions. How will the Treasury manage this evolving demand, and what might this mean for long-term debt policies?
Sources: CoinDesk